area handbook series 

Bolivia 

a country study 




Bolivia 

a country study 



Federal Research Division 
Library of Congress 
Edited by 
Rex A. Hudson and 
Dennis M. Hanratty 
Research Completed 
December 1 989 




On the cover: The Twelfth of the Autumnal Equinox, main 
figure on the back of the Great Idol of Tiwanaku, a 
monolithic pillar excavated in 1932 



Third Edition, First Printing, 1991. 

Library of Congress Cataloging-in-Publication Data 

Bolivia : a country study / Federal Research Division, Library of 
Congress ; edited by Rex A. Hudson and Dennis M. Hanratty. — 
3rd ed. 

p. cm. — (Area handbook series) (DA pam ; 550-66) 
"Supersedes the 1973 edition of Area handbook for Bolivia / 
coauthors: Thomas E. Weil and others" — T.p. verso. 
"Research completed December 1989." 
Includes bibliographical references (pp. 297-328) and index. 
Supt. of Docs. no. : D 101.22:550-66/989 

1. Bolivia. I. Hudson, Rex A., 1947- . II. Hanratty, Dennis 
Michael, 1950- . III. Library of Congress. Federal Research 
Division. IV. Area handbook for Bolivia. V. Series. VI. Series: 
DA pam ; 550-66. 
F3308.B685 1991 90-26427 
984— dc20 CIP 



Headquarters, Department of the Army 
DA Pam 550-66 



For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C. 20402 



Foreword 



This volume is one in a continuing series of books now being 
prepared by the Federal Research Division of the Library of Con- 
gress under the Country Studies — Area Handbook Program. The 
last page of this book lists the other published studies. 

Most books in the series deal with a particular foreign country, 
describing and analyzing its political, economic, social, and national 
security systems and institutions, and examining the interrelation- 
ships of those systems and the ways they are shaped by cultural 
factors. Each study is written by a multidisciplinary team of social 
scientists. The authors seek to provide a basic understanding of 
the observed society, striving for a dynamic rather than a static 
portrayal. Particular attention is devoted to the people who make 
up the society, their origins, dominant beliefs and values, their com- 
mon interests and the issues on which they are divided, the nature 
and extent of their involvement with national institutions, and their 
attitudes toward each other and toward their social system and 
political order. 

The books represent the analysis of the authors and should not 
be construed as an expression of an official United States govern- 
ment position, policy, or decision. The authors have sought to 
adhere to accepted standards of scholarly objectivity. Corrections, 
additions, and suggestions for changes from readers will be wel- 
comed for use in future editions. 

Louis R. Mortimer 
Acting Chief 

Federal Research Division 
Library of Congress 
Washington, D.C. 20540 



iii 



Acknowledgments 



The authors would like to acknowledge the contributions of 
Thomas E. Weil, Jan Knippers Black, Howard I. Blutstein, Hans J. 
Hoyer, Kathryn T. Johnston, and David S. McMorris, who wrote 
the 1973 edition of the Area Handbook for Bolivia. The present volume 
incorporates portions of their work. 

The authors are grateful to individuals in various agencies of 
the United States government and private institutions who gave 
their time, research materials, and special knowledge to provide 
information and perspective. None of these agencies or institutions 
is in any way responsible for the work of the authors, however. 

The authors also would like to thank those who contributed di- 
rectly to the manuscript. These include Richard F. Nyrop, who 
reviewed all drafts and served as liaison with the sponsoring agency; 
Sandra W. Meditz, who performed the substantive review of all 
textual and graphic materials; Mimi Cantwell, who edited the chap- 
ters; Martha E. Hopkins, who managed editing; Andrea T. Merrill, 
who managed production; and Barbara Edgerton, Janie L. Gilchrist, 
and Izella Watson, who did the word processing. In addition, 
Beverly Wolpert performed the final prepublication editorial review, 
and Shirley Kessel compiled the index. Malinda B. Neale of the 
Library of Congress Printing and Processing Section performed 
phototypesetting, under the supervision of Peggy Pixley. 

David P. Cabitto, who was assisted by Sandra K. Ferrell and 
Kimberly A. Lord, provided invaluable graphics support. David P. 
Cabitto prepared the illustrations, Sandra K. Ferrell prepared the 
ranks and insignia charts, and Kimberly A. Lord prepared all the 
maps except for the topography and drainage map, which was pre- 
pared by Harriett R. Blood. Tim Merrill provided geographic 
support. 

Finally, the authors acknowledge the generosity of the individuals 
and the public and private agencies, as well as the Embassy of 
Bolivia, who allowed their photographs to be used in this study. 
The authors are particularly indebted to Kevin Healy of the Inter- 
American Foundation for providing many of the photographs used 
in this volume. 



Contents 



Page 

Foreword iii 

Acknowledgments v 

Preface xiii 

Country Profile XV 

Introduction , xxiii 

Chapter 1. Historical Setting 1 

Maria Luise Wagner 

PRE-COLUMBIAN CIVILIZATIONS 5 

CONQUEST AND COLONIAL RULE, 1532-1809 7 

Conquest and Settlement 7 

The Economy of Upper Peru 8 

State, Church, and Society 11 

INDEPENDENCE FROM SPAIN AND THE EARLY 

NATIONAL PERIOD, 1809-39 15 

Struggle for Independence 15 

Construction of Bolivia: Bolivar, Sucre, and 

Santa Cruz 16 

POLITICAL INSTABILITY AND ECONOMIC 

DECLINE, 1839-79 19 

FROM THE WAR OF THE PACIFIC TO THE CHACO 

WAR, 1879-1935 22 

War of the Pacific 22 

Reconstruction and the Rule of the Conservatives ... 23 

The Liberal Party and the Rise of Tin 25 

The Republican Party and the Great Depression .... 27 

The Chaco War 29 

PRELUDE TO REVOLUTION, 1935-52 30 

Radical Military Government 30 

The Rise of New Political Groups 31 

The "Sexenio," 1946-52 33 

THE BOLIVIAN NATIONAL REVOLUTION, 1952-64 ... 35 

Radical Reforms 35 

The Unfinished Revolution 37 

MILITARY RULE, 1964-82 39 

The Presidency of Barrientos 39 

Revolutionary Nationalism: Ovando and Torres 41 



vii 



The Banzer Regime 43 

The Tumultuous Transition to Democracy, 1978-82 . 45 

Chapter 2. The Society and Its Environment 49 

Patricia Kluck 

GEOGRAPHY 52 

Natural Regions 52 

Climate 56 

POPULATION AND REGIONAL DISTRIBUTION 58 

ETHNIC GROUPS 59 

Lowland Indians 62 

Altiplano, Yungas, and Valley Indians 63 

Mestizos and Cholos 66 

Whites 69 

SOCIAL ORGANIZATION 70 

Rural Society 70 

Urban Society 74 

Family and Kin 79 

MIGRATION AND URBANIZATION 82 

Migration 82 

Urbanization 86 

RELIGION 89 

EDUCATION 93 

HEALTH AND SOCIAL SECURITY 96 

Chapter 3. The Economy 99 

Daniel J. Seyler 

GROWTH AND STRUCTURE OF THE ECONOMY 102 

ECONOMIC POLICY 106 

Fiscal Policy 106 

Monetary and Exchange Rate Policies 108 

LABOR 109 

Formal Sector 109 

Informal Sector 112 

AGRICULTURE 113 

Land Tenure 114 

Land Reform and Land Policy 115 

Land Use 116 

Crops 119 

Farming Technology 126 

Livestock 126 

Forestry and Fishing 127 

ENERGY 128 

Petroleum and Natural Gas 129 

Electricity 132 



Vlll 



MINING 133 

Structure of the Mining Industry 133 

Tin and Related Metals 136 

Other Metals and Minerals 138 

MANUFACTURING AND CONSTRUCTION 139 

SERVICES 142 

Banking and Financial Services 142 

Transportation 144 

Communications 148 

Tourism 149 

FOREIGN ECONOMIC RELATIONS 149 

Foreign Trade 149 

Balance of Payments 152 

Debt 153 

Foreign Assistance 155 

Chapter 4. Government and Politics 159 

Eduardo A. Gamarra 

CONSTITUTIONAL BACKGROUND 162 

GOVERNMENTAL STRUCTURE 169 

The Executive 169 

The Legislature 172 

The Judiciary 176 

The Electoral System 178 

Departmental and Local Government 180 

POLITICAL DYNAMICS 182 

The Legacy of the 1952 Revolution 182 

The Tortuous Transition to Democracy 184 

Democracy and Economic Stabilization 187 

The 1989 Elections 190 

Political Forces and Interest Groups 194 

The Media 205 

FOREIGN RELATIONS 207 

The United States 209 

The Soviet Union 212 

The Third World 213 

Neighboring Countries 215 

Membership in International Organizations 217 

Chapter 5. National Security 219 

Rex A. Hudson 

EVOLUTION OF THE MILITARY ROLE IN SOCIETY 

AND GOVERNMENT 222 

Early History 222 



ix 



The Legacy of the Chaco War 224 

Reorganization of the Armed Forces, 1952-66 226 

The Counterinsurgency Decade 229 

Military Intervention in Politics, 1970-85 230 

THE ARMED FORCES 230 

Mission and Organization 230 

Army 233 

Navy 234 

Air Force 235 

Civil Aeronautics 236 

Civic Action 237 

Defense Budget 238 

MANPOWER AND TRAINING 238 

Conscription 238 

Ranks, Uniforms, and Insignia 239 

Military Schools 240 

Military Justice 245 

FOREIGN MILITARY ASSISTANCE IN THE 1980s 245 

The United States 245 

Other Foreign Military Ties 247 

THE SECURITY FORCES 247 

Historical Background 247 

Mission and Organization 248 

Special Police Forces 249 

Regional Police Structure 251 

Recruitment and Training 253 

THREATS TO INTERNAL SECURITY 254 

Narcotics Trafficking 254 

Subversive Groups 266 

CRIME AND PUNISHMENT 267 

The Criminal Justice System 267 

The Penal System 271 

Incidence of Crime 273 

Appendix. Tables 279 

Bibliography 297 

Glossary 329 

Index 333 

List of Figures 

1 Administrative Divisions of Bolivia, 1989 xxii 

2 Three South American Viceroyalties, ca. 1800 12 

3 Major Bolivian Territorial Losses, 1867-1938 24 



x 



4 Topography and Drainage 54 

5 Estimated Population by Age and Sex, 1989 60 

6 Major Ethnolinguistic Groups, 1988 64 

7 Population Density, 1985 88 

8 Gross Domestic Product (GDP) by Sector, FY 1987 114 

9 Primary Petroleum, Natural Gas, and Minerals 

Activities, 1988 130 

10 Transportation System, 1988 146 

11 Governmental System, 1989 170 

12 Organization of the Armed Forces, 1989 232 

13 Officer Ranks and Insignia, 1989 242 

14 Enlisted Ranks and Insignia, 1989 244 

15 Organization of the Police Forces, 1989 250 

16 Principal Coca-Growing Regions, 1985 260 



xi 



Preface 



Like its predecessor, this study is an attempt to examine objec- 
tively and concisely the dominant historical, social, economic, po- 
litical, and military aspects of contemporary Bolivia. Sources of 
information included scholarly books, journals, monographs, official 
reports of governments and international organizations, numer- 
ous periodicals, and interviews with individuals having special com- 
petence in Bolivian affairs. Chapter bibliographies appear at the 
end of the book; brief comments on sources recommended for fur- 
ther reading appear at the end of each chapter. Measurements are 
given in the metric system; a conversion table is provided to assist 
readers unfamiliar with metric measurements (see table 1 , Appen- 
dix). A glossary is also included. 

Although there are numerous variations, Spanish surnames 
generally are composed of both the father's and the mother's family 
names, in that order. In the instance of Victor Paz Estenssoro, for 
example, Paz is his patronymic, and Estenssoro is his mother's 
maiden name. In informal use, the matronymic is often dropped, 
a practice that has usually been followed in this book except in cases 
where the individual is usually referred to by his double surname 
or could easily be confused with a relative. For example, to avoid 
confusing Paz Estenssoro with Jaime Paz Zamora, both their patro- 
nymics and matronymics are used. 



Xlll 



Country Profile 




Country 

Formal Name: Republic of Bolivia (Republica de Bolivia). 

Short Name: Bolivia. 

Term for Citizens: Bolivian(s). 

Capital: La Paz (seat of government); Sucre (legal capital and seat 
of judiciary). 

Geography 

Size: 1,098,581 square kilometers. 

Topography: Landlocked. Land is 20 percent arid or desert, 40 
percent rain forest, 25 percent pasture and meadow, 2 percent 
arable, 2 percent inland water, and 11 percent other, including 



xv 



negligible percentage irrigated. Divided by two parallel Andean 
ranges or Cordilleras, on roughly north-south axis, into three dis- 
tinct ecozones: vast arid Altiplano plateau between western range 
(Cordillera Occidental) and eastern range (Cordillera Occidental), 
with Lake Titicaca on northern end; semitropical Yungas and 
temperate valleys of Cordillera Oriental; and eastern lowlands 
(Oriente), including semiarid Chaco region. 

Climate: Tropical with heavy rainfall in northern lowlands to tem- 
perate in highland valleys and harsh, chilly conditions on wind- 
swept Altiplano, where daily temperatures fluctuate sharply. 
Uninhabited areas over 5,500 meters high have arctic climate. 

Society 

Population: Estimated 6.6 million in mid- 1989 with 2.1 percent 
growth rate; projected annual growth rate of up to 2.6 percent to 
year 2000. 

Education and Literacy: Compulsory attendance between ages 
seven and fourteen followed by three years of intermediate school. 
Four-year secondary education consisted of two-year general pro- 
gram followed by two-year specialized program. Higher educa- 
tion consisted of University of Bolivia and variety of public and 
private institutes. Estimated 75 percent literacy rate in mid- 
1980s. 

Health: In mid-1980s Bolivia continued to record some of worst 
health indicators in Western Hemisphere. Life expectancy in 1989 
fifty-two years for males and fifty-six years for females. Infant mor- 
tality 124.4 per 1,000 live births. Nutritional deficiencies affected 
70 percent of population. Potable water inaccessible to 57 percent; 
adequate sanitary facilities unavailable to 76 percent. 

Religion: Ninety- five percent Roman Catholic, but many only 
nominal adherents. Active Protestant minority, especially Evan- 
gelical Methodists. In 1980s Mormons, Jehovah's Witnesses, 
Seventh-Day Adventists, and various Pentecostal denominations 
gained increasing adherents. Other denominations included Men- 
nonites and Bahai faith and small Jewish community. 

Language: Spanish, Quechua, and Aymara (all official). 

Ethnic Groups: Quechua, 30 percent; Aymara, 25 percent; mixed, 
25 to 30 percent; and whites (blancos), 5 to 15 percent. Lowland 
Indians, numbering about 100,000 in early 1980s, divided into nine 
major linguistic groups and nearly thirty subgroups. 



xvi 



Economy 



Gross Domestic Product (GDP): US$4.35 billion in 1987, or 
roughly US$640 per capita. After growing unprecedented 5.5 per- 
cent per year in 1970s, economy ravaged by recessionary and 
hyperinflationary spiral peaking in 1985. Economy grew 2 to 3 per- 
cent per year in second half of 1980s. Unemployment averaged 
under 6 percent during 1970s but reached more than 20 percent 
by 1987. 

Agriculture: Second most agricultural country in South America, 
with 60 percent of farmers in highlands and 20 percent in relatively 
fertile valleys. Accounted for 23 percent of GDP in 1987. Employed 
about half (46 percent) of official labor force estimated at 1.6 mil- 
lion in 1986. Accounted for only 15 percent of total exports in late 
1980s. Farming technology primitive. Underground economy — 
based on contraband, coca production, and other commercial trad- 
ing in informal sector — employed two-thirds of Bolivia's workers. 

Industry: Employed 20 percent of work force in late 1980s. Silver 
and tin traditionally dominant mining industries, but mining sec- 
tor declined after tin market collapse in 1985. In 1987 mining sec- 
tor accounted for only 4 percent of GDP, 36 percent of exports, 
2.5 percent of government revenues, and 2 percent of labor force. 
Coca/cocaine industry rivaled total legal exports but fueled infla- 
tion. Manufacturing sector played minor role (10 percent of GDP 
in 1987) in economy and consisted mainly of agriculture, hydro- 
carbons, and mining. Construction slowed in late 1980s to 3 per- 
cent of GDP. 

Energy: Hydrocarbons, particularly natural gas, leading export 
and constituted critically important sector of economy in late 1980s. 
Substantial hydroelectric potential. Relatively low level of domes- 
tic energy consumption, destined for residential or commercial use 
(46 percent), followed by transportation (31 percent), industry (20 
percent), and mining (3 percent). 

Services: Employed 34 percent of work force in late 1980s. Sector 
included banking and other financial services, transportation, com- 
munications, and tourism. Despite small numbers and shaky finan- 
cial status, commercial banks remained core of private financial 
sector in 1988, with US$357 million in assets. 

Exchange Rate: Boliviano replaced Bolivian peso as official cur- 
rency January 1, 1987. After floating against United States dol- 
lar, boliviano stabilized at B2.3 = US$1 by 1988; difference between 
official and black-market rates did not exceed 1 percent. 



xvn 



Imports: Officially, over US$777 million in 1987; unofficially, over 
US$1 billion, taking into account contraband imports. Most im- 
ports from Brazil in 1980s. In 1987 nearly 42 percent of total im- 
ports capital goods; 40 percent, raw materials and intermediate 
goods; 16 percent, consumer goods. 

Exports: Official exports in 1987 totaled US$569 million, lowest 
level of 1980s, a period of declining terms of trade. Export com- 
petitiveness increased after 1985, when all export taxes were 
abolished and floating exchange rate was adopted. Coca-related 
exports often equaled or exceeded legal exports in 1980s, generat- 
ing from US$600 million to US$1 billion annually, although 
estimated 1988 cocaine revenues fell below US$300 million. 
Hydrocarbons became leading export in 1980s, accounting for 1 1 
percent of GDP and over 50 percent of government revenues in 
1985. Natural gas replaced tin and other minerals as leading ex- 
port, growing from 21 to 44 percent of exports in 1980-87; most 
went to Argentina and Brazil. Tin declined to just over 12 percent 
by 1987. Timber exports, mainly to Brazil, surpassed all other legal 
agricultural exports in 1987 and totaled US$31 million. 

Balance of Payments: Experienced persistent deficits during 1980s, 
averaging 10 percent of GDP in first half of 1980s. Public sector 
deficit dropped from 28 percent of GDP in 1984 to 3.8 percent 
in 1986. Total external debt of US$4.6 billion in 1986 slightly ex- 
ceeded GDP. Deficit in 1987 nearly US$500 million (10.5 percent 
of GDP), when public sector expenditures equaled about 30 per- 
cent of GDP. Deficits fell to 6 percent in 1988. Gross reserves at 
end of 1988 totaled nearly US$405 million and net reserves about 
US$181 million. Gold reserves totaled US$300 million. 

Fiscal Year: Calendar year. 

Fiscal Policy: President Victor Paz Estenssoro's New Economic 
Policy (Nueva Politica Economica — NPE), imposed in 1985, elimi- 
nated hyperinflation and reduced inflation to near zero, rising to 15 
percent per year in late 1980s. Drastic NPE reforms froze spending 
by all state-owned enterprises, eliminated subsidies, lifted price con- 
trols, lowered import tariffs by introducing unified 20 percent duty, 
raised oil prices, undertook aggressive tax collection, radically re- 
structured largest and most costly state-owned mining and oil-drilling 
companies, and dismantled Bolivian Development Corporation. 

Transportation and Communications 

Ports: No direct outlet to international ports since 1879. Employed 
ports and warehousing facilities at Arica and Antofagasta, Chile; 



xviii 



Matarani and Ilo, Peru; and Santos, Brazil. Also used free port 
facilities in Rosario, Argentina; Nueva Palmira, Uruguay; and 
Belem, Brazil. 

Railroads: Most important transport system for external trade (ex- 
cluding pipelines). System consisted of over 3,700 kilometers of 
rail and carried more than 535 million tons of freight and 2.4 mil- 
lion passengers a year. 

Roads: Only 3 percent of the 41,000 kilometers of roads paved; 
81 percent dirt and 16 percent gravel. Road maintenance haphaz- 
ard and substandard. At least 110,000 vehicles registered in late 
1980s. 

Airports: Official airports numbered thirty- two (only six paved). 
La Paz and Santa Cruz each had international airport. Unofficial 
airstrips numbered 800, many in lowlands used for narcotics 
trafficking. 

Waterways: About 14,000 kilometers of waterways in four main 
systems — Beni, Pilcomayo, Titicaca-Desaguadero, and Mamore — 
open to navigation by light-draught vessels. 

Communications: In 1988 population had some 3.5 million radios, 
access to over 125 mostiy privately owned radio stations, 650,000 
television sets, six main daily newspapers, and only 65,000 
telephones. 

Government and Politics 

Government: Executive power vested in president of the repub- 
lic, elected to four-year term either by majority popular vote or, 
in absence of majority winner, by National Congress (hereafter, 
Congress), which selects one of top three candidates. Reelection 
of incumbent not permitted until four years have elapsed. Presi- 
dent heads Council of Ministers (representing sixteen ministries) 
and various other councils. Legislative power resides in bicameral 
Congress, consisting of Chamber of Deputies and Senate. Con- 
gress major actor in national politics, passing or modifying legis- 
lation and approving president's annual budget, economic policy, 
government loans, and treaties and other international agreements. 
Needs two- thirds vote to override presidential veto. Convenes an- 
nually on August 6 in La Paz. 

Politics: Jaime Paz Zamora, leader of social democratic-oriented 
Movement of the Revolutionary Left (Movimiento de la Izquierda 
Revolucionaria — MIR) and third-place runner-up in May 1989 



xix 



popular elections, assumed presidency August 6, 1989, after being 
selected by Congress. Prior to nomination, Paz Zamora allied with 
former president and second-place runner-up Hugo Banzer Suarez 
and his Nationalist Democratic Action (Accion Democratica 
Nacionalista — ADN) party, whereby Banzer' s party was given vice 
presidency and half the cabinet positions. Paz Zamora succeeded 
his uncle, Victor Paz Estenssoro, a founder of the Nationalist Revolu- 
tionary Movement (Movimiento Nacionalista Revolucionario — 
MNR). Despite leftist reputation, Paz Zamora vowed to continue 
predecessor's antinarcotics efforts and successful economic reform 
policy. 

International Relations: Long history of territorial losses to neigh- 
boring nations. Relations with United States have fluctuated since 
1950s. Some sectors condemned United States support for rightist 
military regimes in 1960s and 1970s. United States human rights 
emphasis in late 1970s and nonrecognition of Bolivia's right-wing 
military regimes in early 1 980s established new pattern in bilateral 
relations. Bolivian-United States relations cordial during third Paz 
Estenssoro administration (1985-89). In 1989 relations with Argen- 
tina somewhat strained, owing to Argentinean arrears on natural 
gas payments. Relations with Brazil improving in 1989, because 
of joint construction agreements and antidrug-trafficking measures. 
Relations with Chile remained contentious in 1989, owing to Chile's 
refusal to consider Bolivia's requests to negotiate a port outlet. 

International Agreements and Membership: Party to Inter- 
American Treaty of Reciprocal Assistance of 1947. Member of Or- 
ganization of American States, United Nations and its specialized 
agencies, International Monetary Fund, Inter- American Develop- 
ment Bank, Andean Common Market, Amazonian Pact, Latin 
American Integration Association, Latin American Economic Sys- 
tem, Nonaligned Movement, and International Parliamentary 
Union. 

National Security 

Armed Forces: Included army (20,200), navy (3,800), and air force 
(4,000), with total strength estimated at 28,000 in 1989. Program 
launched to expand troops to 35,000. 

Military Units: Army organized into ten divisions (consisting of 
eight cavalry regiments, twenty- two infantry battalions, two 
mechanized regiments, one motorized infantry regiment with two 
battalions, three ranger battalions, three artillery * 'regiments" (bat- 
talions), five artillery batteries, one paratroop battalion, and six 



xx 



engineer battalions) and logistical and instructional support com- 
mands. Navy consisted of small motor launches operating on Lake 
Titicaca and northeastern rivers and organized into five naval dis- 
tricts, each with one flotilla, as well as one naval aviation coun- 
terinsurgency squadron. Air force organized into three air brigades 
with thirteen subordinate air groups. 

Equipment: Ground forces armaments included mosdy obsolete 
United States equipment but also Brazilian armored combat vehi- 
cles and personnel carriers. Naval fleet of several dozen patrol craft 
of various sizes. Air force inventory included modest number of 
poorly maintained light tactical aircraft, few transport aircraft and 
helicopters, and several dozen trainers. 

Police: Subordinate to Ministry of Interior, Migration, and Justice. 
National Police Corps had estimated 15,000 personnel and con- 
sisted of General Administration section, 5,000-member para- 
military National Guard, Directorate of National Investigations, 
Customs Police, Traffic Police, and National Highway Service, 
as well as Fire Corps staffed by police personnel. 

Antinarcotics Forces: Created in 1987, Ministry of Interior, Mi- 
gration, and Justice's Special Antinarcotics Force (Fuerza Espe- 
cial de Lucha Contra el Narcotrafico— FELCN) evolved in 1989 
into viable joint-service institution. Air force's Task Force pilots 
supporting FELCN flew United States-loaned helicopters nearly 
3,200 accident-free hours, and pilot proficiency continued to im- 
prove. Bolivian Navy Riverine Task Force remained FELCN' s least 
effective element, owing to corruption and command and opera- 
tional shortcomings. The 640-member Rural Area Police Patrol 
Unit (Unidad Movil Policial para Areas Rurales — Umopar), 
FELCN' s principal interdiction component, continued to improve 
as an institution; its drug seizures increased. Umopar units, sup- 
ported by FELCN helicopter and air force transport aircraft units, 
conducted several sophisticated air mobile assaults against traffick- 
ing targets in second half of 1989. Umopar' s training facility in 
Chapare region continued to improve. 



xxi 



BRAZIL 



W 



\ 



? PANDO 



— 12 



Cobija 

\ 



— • — International boundary 

— — Department boundary 
® National capital 

• Department capital 

Sucre is the legal capital and 
seat of the judiciary. 

50 100 150 Kilometers 
I — 1 — H h . 



BENI 



f La Paz 



Lake 
Titicaca 



Trinidad ^ 
( 

\ 



\ 



COCHABAMBA 



SANTA CRUZ 



WL _ / -\Cochabamba^- Santa Cruz 
Oruro • l """" ^ \ 



ORURO 



A 



• 7 Sucre* 



r 



-20 



Pot OS I 



POTOSI | CHUQUISACA_ 



/ 



IN 

A 



PARAGUAY 



j 
) 



ARGENTINA 



V Boundary representation 
' ■ hot necessarily authoritative. 

N 60 



Figure 1. Administrative Divisions of Bolivia, 1989 



xxii 



Introduction 



BOLIVIA'S WEALTH OF NATURAL wonders, colorful Indian 
traditions, and enigmatic ancient ruins make it one of the world's 
most unusual countries. The "Tibet" of South America, Bolivia 
is traversed by three massive Andean ranges, which include four 
of the world's highest eternally snow-topped mountains, towering 
to heights up to 6,550 meters (Sajama). Although the country is 
landlocked, it has Lake Titicaca, lying half in Bolivia and half in 
Peru, the world's second largest inland sea and highest navigable 
lake (3,810 meters above sea level), as well as one of the deepest 
(370 meters). 

Bolivia is a land of sharp contrasts with climatic conditions rang- 
ing from arctic to tropical. It is divided into three distinct ecozones: 
the bleak, windswept, Tibetan-like plateau or "high plain" called 
the Altiplano (3,600 meters high) separating two generally parallel 
Andean cordilleras; the intermediary valley region (often referred 
to somewhat loosely by travel writers as the yungas, meaning warm 
valleys), which consists of both the eastern temperate high valleys 
and the only valley that Bolivians call the Yungas, the steep semi- 
tropical valley northeast of the city of La Paz; and the eastern trop- 
ical flat lowlands, which make up about 70 percent of the country, 
including part of the vast, semiarid Chaco region in the south. The 
first two of these ecozones constitute the highlands. 

The central range, or Cordillera Real, forms a magnificent snow- 
capped backdrop for La Paz, which is the seat of government. No 
other major city in the world can boast of a higher, more immense 
mountain overlooking it than La Paz's Illimani (6,322 meters). 
Although La Paz is centered at the bottom of a deep, bowl- shaped 
canyon (protected from the chilly Altiplano winds), the city is 3,557 
meters high, whereas rival Santa Cruz, the fastest-growing large 
city in the eastern lowlands and Bolivia's second-largest city, is only 
416 meters in elevation. 

One of the poorest countries in South America in the late 1980s 
(per capita income was US$640 in 1987), Bolivia also had some 
of the lowest health and other social indicators in Latin America, 
but it did not suffer from one common Third World problem, 
namely, overpopulation. Although larger than France and Spain 
combined, Bolivia had only about 7 percent of their total popula- 
tion (or fewer than 7 million inhabitants), one of the lowest popu- 
lation densities in the Western Hemisphere. The nation's population 
had more than doubled, however, since 1950, and its distribution, 



xxin 



slightly more rural than urban, was highly uneven, with most of 
the people living in the highlands. The urban population was con- 
centrated in only six main highland cities and Santa Cruz. (Bolivia's 
projected population of nearly 10 million in 2000 was expected to 
be more urban than rural.) 

With 55 percent of its population Indian, Bolivia has the propor- 
tionately highest Indian population of any country in Latin Amer- 
ica, although Guatemala and Peru both have larger numbers of 
Indian inhabitants. Nevertheless, the country was sharply divided 
in its ethnic composition, languages, and modes of living in 1989. 
The two principal highland Indian groups, the Quechua and 
Aymara, constituted 30 percent and 25 percent of the population, 
respectively. Cholos or mestizos (those of mixed blood) made up 
at most 30 percent. The Quechua and the Aymara traditionally 
had not intermarried and had always kept their languages, physi- 
cal characteristics, and many social traditions distinct, thereby add- 
ing to the country's deep regional and social cleavages. (In addition, 
very few of either group ever learned Spanish.) The two groups 
also inhabited different areas: the Aymara lived mainly in the north- 
ern part of the Altiplano and Yungas, and the Quechua lived in 
the two north-south mountain ranges east of the Altiplano and in 
the temperate valleys. Whites (mostly descendants of Spaniards) 
constituted less than 15 percent of the population. Although they 
inhabited the same cities, the whites had little in common with the 
Indians. 

The Quechua, once part of the great Inca Empire (Tawantin- 
suyu) centered in Cuzco (Cusco) in present-day Peru, were valley 
people in pre-Incan times who adopted the language of the con- 
quering Incas. The origins of the Aymara have remained some- 
what obscure. The Aymara and the few surviving members of the 
Puquina- speaking Uru and Chipaya tribes, which the Aymara once 
oppressed, still ply Lake Titicaca in totora reed boats, as they have 
for almost a millennium. Archaeologists generally have held that 
the Aymara emerged as a distinct group about A.D. 1 100 and that 
their ancestors were part of the great Aymara- speaking Tiwanakan 
Empire (or possibly only the Kolla Indians, who constituted its work 
force) that was centered at Tiwanaku (Tiahuanaco) at the southern 
end of Lake Titicaca. 

Bolivia's largely unknown Tiwanakan prehistory is as alien as 
the Altiplano 's topography. The origins of the Tiwanakans and 
their sudden disappearance have remained shrouded in mys- 
tery, myth, and controversy. Early Spanish chroniclers found that 
the Aymara lacked an ancestral memory or written record of the 
Tiwanakans. The Tiwanakans appeared as an already robust culture 



xxiv 



in at least 600 B.C. (although some archaeologists date them back 
to around 1500 B.C.) and developed through at least five distinct 
stages over nearly two millennia, until becoming a lost civilization 
around A.D. 1200. During the culture's final centuries, when it 
flourished, its religious influence extended throughout the Pacific 
Andean region as far north as Ecuador. According to archaeolo- 
gists, much of the later Quechua- speaking Incan civilization was 
based on inherited Tiwanakan culture and technology. 

Tiwanaku was the sun- worshiping empire's lofty ceremonial and 
administrative center, located on what was then an island in Lake 
Titicaca. Over the centuries, the lake has receded, leaving the ruins 
some twenty kilometers from its shore (the ruins of at least one 
other ancient city have been discovered submerged). Tiwanaku 
occupied an area of almost six square kilometers and had a popu- 
lation ranging from 20,000 to 100,000. The site, although still only 
partially excavated, contains some of the most impressive prehistoric 
ruins in the Western Hemisphere. Its immense, open- sky stone edi- 
fices, such as the temple of Akapana and Palace of the Sarcophagi, 
are constructed on enormous foundations and contain polished 
walls. Pyramidal temples include the Sun Temple of Kalasasaya 
with its striking Calendar Gate, or Gateway of the Sun (Puerta 
del Sol), and another estimated to have been as large as Egypt's 
Great Pyramid. The walls of these once brightly painted temples 
were adorned with gold-covered sculptured bas-reliefs. Over the 
centuries since the Spaniards arrived and began to systematically 
destroy the site, using it as a quarry, the ruins have been vandal- 
ized to such an extent that only the heaviest megalithic vestiges 
remain. 

The Tiwanakan culture was as advanced in many respects as 
that of the ancient Egyptians. The Tiwanakans built an extensive 
system of roads, terraced mountain slopes, and huge raised ter- 
races surrounded by deep, stone-block irrigation canals that made 
what is today a barren, dry region into fertile agricultural land for 
growing highly nutritious crops, such as a grain called quinoa (their 
sacred " mother grain"). Their buildings contained carved stone 
pipes for plumbing and were constructed of geometrically cut stone 
blocks linked with copper pins and clamps so tightly that mortar 
was unnecessary. The Tiwanakans used timber-built vessels to ferry 
andesite stone slabs weighing more than sixty tons forty-eight 
kilometers across the lake from quarries at the extinct volcano 
Kayappia, measured and cut them meticulously, and ground and 
burnished them smooth. Thousands of workers transported red 
sandstone blocks weighing up to 160 tons from a quarry ten kilo- 
meters away by dragging them along an embankment covered with 



xxv 



wet clay. Tiwanakan sculptors adorned their large pillar-like statues 
of the Sun God (Kon-Tiki Viracocha) and priest-kings and other 
slabs with an elaborately developed, but as yet undeciphered, 
iconography. Artisans created exquisite golden ornaments and cer- 
amics, the latter containing brilliant colors and sculptured figures. 

Investigators have postulated various theories to explain the mys- 
terious disappearance of the Tiwanakan civilization. Some authors 
have speculated that the Aymara- speaking, warlike Kollas liquidated 
the Tiwanakans. Incan legend also spoke of a tribe from the 
Coquimbo Valley in Peru that attacked and massacred the bearded 
white men in a battle on an island in Lake Titicaca; only Kon- 
Tiki and a few others escaped and fled west. Some scientists have 
hypothesized that a dramatic drop in the water level of Lake Titicaca 
could have debilitated the Tiwanakans and made them vulnerable 
to attack by hostile tribes. Archaeologist Alan L. Kolata has de- 
termined that Tiwanaku's irrigation fields were no longer func- 
tional by A.D. 1000, possibly as a result of a severe drought lasting 
for decades. In any event, there seems to be general agreement 
that the scattered megalithic remnants of uncompleted projects pro- 
vide evidence that Tiwanakan life came to an abrupt end. From 
1200 to 1438, the Kollas assimilated the peoples who had lived under 
the Tiwanakan Empire. Thus, the Kollas are presumed to have 
inherited elements of the vanished culture, such as some stone- 
building skills, but not the more advanced aspects of the civilization. 

The Incas of Peru emerged shortly after the collapse of the 
Tiwanakans and reached an equally advanced level of civilization 
during their relatively brief history of several hundred years. Incan 
legends also gave accounts of bearded white men who came from 
the shores of Lake Titicaca and brought them civilization and then 
went to the Pacific Coast and disappeared overseas. The Incas wor- 
shiped the sun and built sun temples on the Island of the Sun in 
Lake Titicaca. Architectural similarities with Tiwanakan culture 
included the trapezoidal shapes of doors and window openings and 
the masterfully cut and interlocked walls of large stone blocks. 

In the late fifteenth century, the Incas, after meeting stubborn 
resistance, finally brought the Kollas under their control. Accord- 
ing to legend, the Incas were awed by the then still magnificent 
ruins of Tiwanaku, which they found occupied by the Aymara. 
Nevertheless, the Incas kept their distance from the site as if it were 
taboo. They imposed only their religion on the Aymara and al- 
lowed them to keep their social traditions and language. The rela- 
tively brief Incan culture in Kollasuyo (present-day Bolivia) 
produced beautiful ceramics and brightly colored rectangular pack 



xxvi 



cloths (ahuayos), styles that still characterize the work of the Quechua 
and Aymara. Incan outposts extended to the fringes of the eastern 
escarpment (east of Cochabamba), as evidenced by the important 
ruins of Incallacta and possibly Samaipata, although whether the 
latter, a colossal fortress carved out of solid rock on a mountain- 
top, is actually Incan or Tiwanakan has been disputed. 

When Francisco Pizarro arrived in Tumbes (in present-day Peru) 
in 1532, the Incas thought he was Viracocha Inca returning. After 
conquering the Incas, the conquistadors systematically destroyed 
the Incan and other "backward" Indian cultures, including most 
of an estimated seventy species of exotic Incan crops, such as quinoa, 
that are only now being rediscovered and reintroduced around the 
world. For almost three centuries, the Spaniards exploited the rich 
silver mines of what they called Upper (Alto) Peru or Charcas 
(present-day Bolivia). They subjected the mainly Aymara Indians 
on the Altiplano and the Quechua Indians in the temperate val- 
leys to a system of feudal peonage in the mines and textile mills 
(obrajes) and on the haciendas, denying them even the right to learn 
to read and write their own languages. 

Imported African slaves died off so rapidly doing the strenuous 
high-altitude mining work and the Indians feared them so much 
that they were used mainly for domestic work in the silver-mining 
city of Potosi, for many years the richest and largest city in the 
Americas (160,000 residents in 1660). African slaves, however, be- 
came an Aymara- speaking subculture in the Yungas, which they 
colonized for coca cultivation. Chewing coca leaves (supposedly 
the exclusive right of the Incan elite in pre-Columbian times) ena- 
bled the Aymara to cope with the hardships of mining by numb- 
ing their senses to the cold and deadening their appetites. 

After becoming an independent republic in 1825 under the 
presidency of its liberator and namesake, Simon Bolivar Palacios, 
Bolivia proved difficult to govern and hold together; its heterogene- 
ous, illiterate population lacked any sense of national self-identity 
or patriotism. Regional rivalries that antedated independence re- 
mained rife. Because the Indians remained culturally and physi- 
cally isolated and illiterate, most of them probably were unaware 
that they lived in a country called Bolivia until well into the twen- 
tieth century. The distinctive heritage of architecture, painting, 
and sculpture left by the Spaniards was of little use to the Indian 
masses, whose daily life was a struggle to survive. Furthermore, 
Bolivia was 2.2 million square kilometers, or more than twice its 
present size. During its first 110 years, the nation lost approximately 
half of its territory in wars and controversial bilateral deals. The 
most traumatic loss resulted from the War of the Pacific (1879-83), 



xxvn 



in which Chile seized Bolivia's seacoast and rich nitrate fields in 
the Atacama Desert. 

Bolivia has suffered from the rule of numerous despotic and in- 
competent caudillos during its history as an independent nation. 
None was crueler and more depraved and ignorant than General 
Mariano Melgarejo Valencia (1864-71), whose many victims in- 
cluded the conspiratorial General Manuel Isidoro Belzu Humerez 
(1848-55), murdered on being received in the presidential office 
after returning from exile. Melgarejo, a mining baron, squandered 
the country's treasury on his mistress, ceded an immense rubber- 
farming territory to Brazil in exchange for the right to use the 
Amazon River as a waterway, and initiated the government's sei- 
zure and sale of Indian communal lands. Belzu 's frequently quoted 
valedictory, however, that "Bolivia is totally incapable of being 
governed," created an enduring stereotype. In Belzu's era, more- 
over, Bolivia's caudillos were so busy fighting for power among 
themselves that they had little time or energy left to govern the 
country effectively. 

A number of exceptional leaders also have governed from the 
Palacio Quemado, or Burnt Palace (the unofficial name given the 
rebuilt Palace of Government after it was burned by a mob in 1875). 
In 1983 the La Paz newspaper Ultima Hora polled thirty-nine promi- 
nent Bolivians in various professions on which seven presidents they 
considered "most significant." The final list (in chronological order) 
consisted mostly of historical figures: General Antonio Jose de Sucre 
Alcala (1825-28), General Andres de Santa Cruz y Calahumana 
(1829-39), Belzu, Melgarejo (who received a record fifteen nega- 
tive votes, as well as two positive ones), Aniceto Arce Ruiz 
(1888-92), Ismael Montes Gamboa (1904-09 and 1913-17), and 
Victor Paz Estenssoro (1952-56, 1960-64, and 1985-89). Those 
garnering the most favorable votes were Santa Cruz and Paz Estens- 
soro (thirty- three and thirty-two, respectively). The next highest- 
rated president, Belzu, curiously garnered twenty-one favorable 
ballots and no negative ones, despite having ruled Bolivia with a 
reign of terror. 

Other well-regarded nineteenth-century leaders included Jose 
Maria Linares Lizarazu (1857-61) and General Jose Ballivian y 
Segurola (1841-47). Linares had widespread support when he seized 
power as the first civilian president but lost it as he became dic- 
tatorial. Ballivian, although widely popular, resigned after tiring 
of putting down insurrections. His urbane and European-educated 
son, Adolfo Ballivian (1873-74), seemed to have the potential of 
becoming an outstanding president and probably would have 
changed Bolivia's involvement in the War of the Pacific had a mortal 



xxvin 



illness not forced him to resign suddenly. Elected to the office (un- 
like his father), Adolfo Ballivian briefly restored honesty, tolerance, 
and liberty to government. 

During the period of Conservative Party rule (1880-99), silver- 
mining magnates, such as Gregorio Pacheco Leyes (1884-88) and 
Arce Ruiz, followed the precedent set by Melgarejo of occupying 
the presidency, but did so legally. During the relatively stable Lib- 
eral Party era (1899-1920), when the tin industry boomed, the three 
tin-mining moguls — Simon I. Patino, a Bolivian cholo who became 
one of the world's richest men; Carlos Aramayo, a Bolivian; and 
Mauricio Hochschild, an Austrian-born Argentine — intervened in 
politics more indirectly by employing politicians and lawyers {la 
rosea — see Glossary) to represent the oligarchy's interests. The min- 
ing and landowning elite kept the mine laborers and landless peasant 
migrants in a system of neofeudal peonage called pongaje and in- 
tensified the despoilment of the Indian communities of their an- 
cestral land. 

The disastrous war with Paraguay, the Chaco War (1932-35), 
cost Bolivia 65,000 lives, hundreds of millions of dollars, and most 
of its vast Chaco territory. Although the Chaco was nearly unin- 
habitable, it was of strategic importance as Bolivia's only access 
to the Atlantic Ocean, by way of the Paraguay River. By discredit- 
ing the traditional oligarchy because of its inept civilian and mili- 
tary leadership, the Chaco War served as a turning point in Bolivia's 
military, political, and cultural life. It opened the way for a series 
of coups by reformist military officers, none of whom fared well 
in office, the creation of new political groups, and political acti- 
vism by the Indians. The Nationalist Revolutionary Movement 
(Movimiento Nacionalista Revolucionario — MNR) emerged as 
Bolivia's first party of the masses. 

Economic decline and social unrest during the post-World War 
II years came to a head in the form of the 1952 Revolution led 
by the MNR's Paz Estenssoro and Hernan Siles Zuazo (1956-60 
and 1982-85). One of Latin America's three most significant agrar- 
ian revolutions of the century and the least violent of the three, 
it was aimed at the 6 percent of the landowners who fully controlled 
92 percent of all cultivated land in the republic. In addition to sweep- 
ing land reform measures, including an end to the pongaje system, 
it returned to the Indians most of the land on the Altiplano taken 
from them in the past. The 1952 Revolution also resulted in civilian 
government, universal suffrage, and primary education in rural 
areas. It thus increased identification by the Indian peasants (cam- 
pesinos) with the national society rather than simply their isolated 
village or hacienda. Moreover, the 1952 Revolution destroyed the 



xxix 



mining interests by nationalizing the tin mines and creating the 
Mining Corporation of Bolivia (Corporation Minera de Bolivia — 
Comibol) and Bolivian Labor Federation (Central Obrera 
Boliviana — COB). After the first years, however, the 1952 Revo- 
lution, dubbed by political scientist James M. Malloy as the "un- 
completed Revolution," lost its momentum; land reform in the 
highlands soon stagnated, and a new elite emerged. 

In 1964 the military, having been rebuilt by the MNR govern- 
ment with United States assistance, reverted to its old ways of stag- 
ing coups and remained in power for most of the next eighteen 
years. During that period, ten military dictators held office, and 
some relied heavily on the army to suppress labor protests by miners 
and peasants. In October 1967, the army defeated an ill-fated at- 
tempt by Cuba's Ernesto ' 'Che" Guevara to start a Cuban-style 
revolution in the politically apathetic Bolivian countryside. The 
news that the charismatic Cuban revolutionary hero, who had not 
been seen in public for two years, was leading an insurgency in 
Bolivia received worldwide publicity; his capture and summary ex- 
ecution earned Bolivia the enmity of the international left (the mili- 
tary officer in charge of the counterinsurgency operation was later 
assassinated in Paris). 

In 1979-80 the country enjoyed a brief respite from military rule 
under Lidia Gueiler Tejada, the country's first woman president, 
whom the National Congress (hereafter, Congress) appointed for 
a one-year mandate. Siles Zuazo, leader of the Nationalist Revolu- 
tionary Movement of the Left (Movimiento Nacionalista Revolu- 
cionario de Izquierda — MNRI), who had been democratically 
elected in 1980, was supposed to succeed Gueiler, but General Luis 
Garcia Meza Tejada (1980-81) staged a bloody military coup in 
July 1980. 

Garcia Meza seized power with the help of cocaine traffickers 
and European mercenaries recruited by Klaus Barbie, longtime 
resident and former Gestapo chief in Lyons. As Garcia Meza's in- 
ternal security adviser, Barbie gave his paramilitary unit, The 
Newlyweds of Death (Los Novios de la Muerte), free rein to prac- 
tice neo-Nazi tactics of arbitrary arrests, torture, and disappear- 
ances. The regime's brutal repression and deep involvement in 
cocaine trafficking isolated the country internationally and dis- 
credited and demoralized the Bolivian military, compelling it to 
oust Garcia Meza and allow a transition to democracy. 

The optimism engendered by the return to civilian rule under 
Siles Zuazo soon turned to widespread discontent and nation- 
wide strikes called by the COB because the virtually bankrupt Siles 
Zuazo government failed to salvage the foundering economy. As the 



XXX 



government printed money to cover growing budget deficits, 
inflation skyrocketed out of control, at one point reaching an ac- 
cumulated rate of about 24,000 percent, Latin America's first 
recorded hyperinflation. For the most part, barter replaced the 
money economy. As a result of a 60 percent drop in the price of 
tin in late 1985, mining, which had dominated the Bolivian econ- 
omy since colonial times, decreased radically. The Siles Zuazo 
government also alienated the United States by opening close 
relations with Cuba and criticizing United States policies toward 
Latin America. 

Having failed completely to stabilize the economy, Siles Zuazo 
cut short his term of office by one year so that presidential and 
congressional elections could be held in July 1985. Paz Estenssoro's 
third presidency (1985-89) was notable not only for being com- 
pleted without a military coup but also for his successful, albeit 
economically harsh, efforts to bring hyperinflation under control 
and to restore a measure of economic and political stability, as well 
as good relations with the United States. Acting on the advice of 
a Harvard professor and several Chilean economists, Paz Estens- 
soro quickly applied orthodox free-market policies to cure Bolivia's 
sick economy, which was choking from decades of state interven- 
tion. He implemented an austere stabilization program, the New 
Economic Policy (Nueva PoHtica Economica — NPE), which slashed 
the government's budget deficit, imposed a wage freeze and a ten- 
fold increase in the price of gasoline, eliminated all price subsi- 
dies, laid off thousands of workers at inefficient state-owned 
companies, including three-quarters of the miners employed by 
Comibol (about four-fifths of its work force), liberalized trade, 
allowed the peso to float against the United States dollar, and 
loosened disclosure requirements for the Central Bank (Banco Cen- 
tral). He also enacted a state of siege to deal with the resulting labor 
unrest. 

In a remarkable accomplishment, the government reduced in- 
flation to nearly zero within weeks of the NPE. Monetary and fis- 
cal achievements included cutting the budget deficit from 36 percent 
of the gross domestic product (GDP — see Glossary) to 4 percent, 
retiring more than US$600 million of the country's burdensome 
foreign debt through an innovative buy-back and debt-equity swap 
program, and modernizing the complex, ineffective tax system. 
Bolivia enjoyed exceptional price stability during the rest of the 
decade, with inflation running at an annual rate of only 6 percent 
in late 1989. 

The 1989 presidential elections, although characterized by 
widespread apathy, were peaceful, widely regarded as fair, and free 



xxxi 



of any threat of military intervention. As such, they affirmed 
Bolivia's progression along the democratic path and growing 
political maturity. According to political scientist Eduardo A. 
Gamarra, the key political question in 1989 was governability. In 
the first round in May, Jaime Paz Zamora, the social democratic 
candidate of Bolivia's center-left Movement of the Revolutionary 
Left (Movimiento de la Izquierda Revolucionaria — MIR), placed 
third behind Hugo Banzer Suarez (1971-78), candidate of the right- 
of-center Nationalist Democratic Action (Accion Democratica 
Nacionalista — ADN), and the MNR's Gonzalo Sanchez de Lozada. 
Because no candidate received a majority in the May elections, 
it once again fell on Congress to choose the president from among 
the three principal candidates. 

Paz Zamora and his longtime political adversary, Banzer, who 
had once jailed Paz Zamora for six months, joined forces in an 
unlikely alliance, called the Patriotic Accord, thereby outmaneu- 
vering front-runner Sanchez de Lozada of the MNR in the con- 
gressional lobbying. Congress subsequently chose Paz Zamora to 
be the country's seventy-sixth president. It also selected Banzer's 
running mate, Christian Democrat Luis Ossio Sanjines, to be vice 
president. Many Bolivians, remembering Paz Zamora' s tumultu- 
ous record as vice president in 1983, initially viewed with anxiety 
and uncertainty the prospect of the one-time revolutionary assuming 
the presidency. On receiving the presidential sash and medal of 
1825 from his uncle, Paz Estenssoro, in August 1989, Paz Zamora 
vowed to maintain a free-market economy, develop agriculture and 
small and medium-size industries, and continue the NPE. Paz 
Estenssoro was Bolivia's first democratically elected head of state 
to complete his term of office in twenty-five years and to turn over 
power to an elected successor. Considering that Paz Zamora was 
Bolivia's third successive democratically elected president and that 
almost half of Bolivia's governments had been de facto military 
regimes, this democratic trend was no small accomplishment. 

Despite its exaggerated image as one of Latin America's most 
unstable and violent countries, Bolivia appeared at the end of 1989 
to have decidedly put two of its traditional maladies — coups and 
inflation — behind it. Furthermore, Bolivia was relatively free of the 
rampant terrorism, insurgency, and criminal violence that afflicted 
the larger Andean nations of Colombia and Peru. With the main 
exception of the Garcia Meza period, its politics in the twentieth 
century were not exceptionally violent. Only three presidents — Pedro 
Blanco Soto (1828-29), Augustin Morales Hernandez (1871-72), 
and Gualberto Villarroel Lopez (1943-46) — all of whom were 



xxxii 



military men who had seized power, were assassinated while in office 
(the deranged Morales by his own nephew). 

Among the formidable challenges confronting Bolivia's new 
democratic government in the 1990s was the export-dependent 
economy, which was stagnant and prone to crises. Despite Paz 
Estenssoro's considerable economic achievements, agricultural pro- 
duction was down, the unemployment rate was running at about 
22 percent, and the terms of trade (see Glossary) had declined by 
almost 50 percent since 1985. Bolivia's growth prospects were con- 
strained by its dependence on Argentine payments for a large share 
of its export revenues, poorly diversified exports, low domestic sav- 
ings, and high levels of foreign debt. In addition, Argentina had 
run up more than US$250 million in arrears for its purchases of 
Bolivian natural gas, causing havoc in Bolivia's balance of pay- 
ments and current account. Nevertheless, the economy grew by 
2.2 percent in 1987 and 2.8 percent in 1988, spurred by a resur- 
gent mining sector, which accounted for 44 percent of the coun- 
try's export income in 1988. 

In mid-November 1989, Paz Zamora responded to his country's 
first crisis, a strike by the 80,000 state teachers who were supported 
by the COB, by the usual method of imposing a state of siege (which 
banned strikes, public meetings, and demonstrations for ninety- 
days), arresting more than 850 union members, and banishing some 
150 of them to internal exile. The teachers were demanding a spe- 
cial wage bonus of US$100 to supplement their meager monthly 
wage of about US$45. He brought the troublesome strike to an 
end the following spring, however, by offering them a 1 7 percent 
pay increase and paying them an already negotiated annual bonus. 

Growing national security, social, and economic threats from 
cocaine trafficking and addiction also confronted the Paz Zamora 
government. About one- third of the work force of 1.6 million in 
1989 was engaged in an underground subsistence economy based 
mainly on coca cultivation and contraband and estimated to be 
larger than the formal economy. The coca/cocaine industry posed 
a dilemma for Bolivia, the world's second largest source of cocaine, 
because of the trade-off between its economic benefits and its po- 
litical, social, and cultural costs. On the one hand, exports of unre- 
fined coca paste and cocaine generated an annual income of US$1 .5 
billion, of which some US$600 million remained within the coun- 
try in 1989. The cocaine industry had become Bolivia's biggest 
employer, employing some 500,000 people in the production of 
coca and the transportation, sale, and manufacture of cocaine, ac- 
cording to Cochabamba's Institute of Social and Economic Studies. 
The majority of the dismissed Comibol workers entered the coca 



xxxin 



trade, many of them joining the Chapare region's approximately 
200,000 workers and peasants involved in cutting and burning the 
rain forest and in growing coca bushes, whose leaves were processed 
into coca paste and cocaine. 

On the other hand, the cocaine industry enabled cocaine 
traffickers — nationals and foreigners alike — to threaten the national 
sovereignty and institutions with occasional acts of terrorism and 
increases in corruption at all levels of public institutions. Other 
by-products of the cocaine business included increased coca-paste 
addiction among Bolivia's skyrocketing numbers of abandoned chil- 
dren, decreased production of relatively unprofitable traditional 
food crops, and a widening income disparity between the wealthy 
minority and the poor, who constituted the overwhelming major- 
ity. Moreover, Bolivia, known for centuries for its minerals — first 
silver and then tin — had become synonymous with cocaine. 

In the late 1980s, Bolivia's coca/cocaine industry dominated re- 
lations with the United States, the principal cocaine-consuming 
country. One of the most difficult challenges facing Paz Zamora 
was complying with a controversial coca eradication law in order 
to continue to qualify for United States economic aid. Although 
Bolivia was attempting, with United States support, to implement 
a program combining cocaine interdiction and coca eradication and 
substitution, its efforts were hampered by strong resistance from 
the increasingly militant and politically powerful peasant unions 
of coca growers, inadequate enforcement, constant expansion of 
coca fields, and corruption. Coca production actually increased by 
more than 20 percent in 1988, according to the United States 
Department of State. 

Bolivia ruled out other more drastic eradication methods, such 
as repression of the coca farmers or herbicidal spraying of coca fields. 
A more effective approach than using coercive methods against the 
coca- growing small farmers, in the view of social scientist Kevin 
Healy, would be, in addition to reducing world demand for co- 
caine, to provide agricultural price supports for the otherwise un- 
profitable substitute crops, such as bananas, coffee, and cocoa. 

December 15, 1989 

* * * 

In March 1990, the United States Department of State reported 
that progress in antinarcotics operations in 1989 was uneven and 
that coca eradication in Bolivia again had failed to keep pace with 
new production. It found, however, that the situation had begun 



xxxiv 



to improve during the last quarter of the year as a result of the 
Paz Zamora government's cooperation with the United States in 
preparing for the Andean Summit in mid-February 1990, its 
stepped-up coca-eradication efforts, and its decision to allow the 
United States to extradite notorious cocaine trafficker Luis Arce 
Gomez. 

During the first five months of 1990, moreover, the Paz Zamora 
government appeared to have stemmed the annual trend of expand- 
ing production. With coca production no longer profitable for many 
small farmers in the Chapare because of a drastic drop in the price 
of coca paste, the farmers reportedly had eradicated more than 3,200 
hectares of the region's estimated 54,000 hectares of coca plants, 
more than in all of 1989. Chapare coca farmers were beginning 
to substitute alternative crops, such as fruit and spices. Coca's 
precipitous, albeit temporary, fall from bonanza- to-bust status in 
Bolivia was attributed largely to a combination of Colombia's crack- 
down on major drug traffickers and the Paz Zamora government's 
vigorous enforcement of its policy to destroy coca-paste laborato- 
ries and crack down on wholesale buyers of coca paste. 

Bolivia's move away from a cocaine-based economy was expected 
to have significant economic costs. The Paz Zamora government 
estimated in early 1990 that US$627 million would be needed for 
crop substitution and rural development over the 1990-95 period. 
Without substantial assistance, the prospects that coca farmers could 
earn a living by producing alternative crops without a guaranteed 
market were uncertain at best. During his official visit to Washing- 
ton in May 1990, Paz Zamora appealed for a major increase in 
financial aid to help extract the Bolivian economy from the cocaine 
business. In addition to financing the operations of Bolivia's anti- 
narcotics police and the Bolivian operations of the United States 
Drug Enforcement Administration (DEA), the United States 
provided US$78 million in development aid and economic sup- 
port in the 1990 fiscal year (FY — see Glossary). A small Peace Corps 
program was reestablished in Bolivia in March 1990. 

Chapare coca farmers were not the only inhabitants of the eastern 
lowlands making their complaints known in 1990. In September 
more than 700 Indians representing ten tribes in Beni Department 
staged a 643 -kilometer " march for dignity and territory" from 
Trinidad to La Paz. The Indians were protesting the destruction 
of the 560,000 hectares of the Chimane Forest that the government 
legally handed over to logging companies in 1987. In addition to 
ruining the forest's flora and fauna, the Indians claimed that the 
loggers were threatening their culture. Critics faulted the logging 
companies for not reforesting, as required by Bolivian law. The 



xxxv 



government attempted to strike a balance between the interests of 
the Indians and loggers by offering to rezone the logging region, 
but not to revoke all timber rights. 

Paz Zamora's continuation of his predecessor's successful free- 
market policies, as well as the new government's success in taming 
Bolivia's inflation, settling its foreign debts, and adopting pro- 
business and pro-foreign investment policies, persuaded the Paris 
Club (see Glossary) creditor countries to grant the country a spe- 
cial debt-rescheduling package in March 1990. The government 
also hoped to increase GDP growth from 1989's meager 2 percent 
to 5 percent per year. To that end, it planned, under a five-year 
program, to sell off 100 of its 157 state-owned companies and use 
the estimated US$500 million in revenues for health, education, 
and public works. 

In addition to its privatization program, the Paz Zamora govern- 
ment began to encourage foreign investment. In 1989 it opened 
a stock exchange in Bolivia and rewrote the Investment Law and 
Mining and Hydrocarbons codes to make them more favorable to 
foreign investment. Bolivia also joined with four other South Ameri- 
can countries — Argentina, Brazil, Paraguay, and Uruguay — in a 
joint effort to call the attention of the world's investors, business 
people, and lending agencies to investment opportunities in the 
region. In the first quarter of 1990, a number of foreign compa- 
nies expressed interest in joint- venture projects to tap Bolivia's vast 
mineral reserves, and several signed on to such undertakings. By 
September, however, Paz Zamora had had to retreat from his 
neoliberal, economically orthodox program under pressure from 
COB unions that had staged strikes and mobilized popular sup- 
port against privatization of "strategic" state companies and for- 
eign mining contracts. 

November 30, 1990 

* * * 

The question of "governability" under the Paz Zamora govern- 
ment that Gamarra raises in Chapter 4 was put to the test in De- 
cember 1990 when the country's fledgling democratic system 
experienced what the daily La Razon somewhat hyperbolically 
described as its "worst political crisis" in a struggle over separa- 
tion of powers. Quintessentially Bolivian, the constitutional crisis 
arose over the seemingly minor matter of the state's overturning 
a 15 percent increase in the levy a company was expected to pay 
on beer sales. On the initiative of the Paz Zamora administration's 



xxxvi 



parliamentary majority in the lower house, Congress suspended 
eight of the twelve members of the Supreme Court of Justice on 
grounds of incompetence. In response, the opposition MNR 
charged that the impeachment proceedings were a Kangaroo court 
and intended to concentrate all three state powers in the hands of 
Paz Zamora and his political partners. Ironically, the president of 
the Supreme Court of Justice called on the military to intervene. 
The spectacle, which Paz Zamora dismissed as "a tempest in a 
teacup," tarnished the international image of Bolivia's new 
democracy. On the positive side, however, the military's inaction 
seemed to reaffirm the democratic system. Indeed, the armed forces 
commander, General Jorge Moreira Rojas, appealed to govern- 
ment and opposition politicians to remain calm "for the good of 
the image of Bolivian democracy." 

In one area at least, Bolivia's economy made a better impres- 
sion of stability in 1990 with an annual inflation rate well below 
15 percent, the lowest in Latin America. In other areas, however, 
economic prospects were less encouraging. A study found that dur- 
ing the 1980s the informal sector of the economy increased 10 per- 
cent, to 55 percent of all jobs, while unemployment increased 
drastically and real wages declined sharply. Growth of GDP in 1990 
was expected to be less than 2.5 percent. Moreover, some observ- 
ers expected 1991 to be a year of conflict between the workers and 
the administration as a result of higher fuel prices and the govern- 
ment 's intention to proceed with plans to privatize most state-run 
enterprises and to allow foreign companies to develop natural 
resources. 



March 15, 1991 Rex A. Hudson 



XXXVll 



Chapter 1. Historical Setting 




Symbolism on the front of the Great Idol of Tiwanaku 



THE HISTORY OF BOLIVIA reflects both its pre-Columbian 
and its colonial heritage. The ruins of Tiwanaku (Tiahuanaco) tes- 
tify to the first great Andean empire. Bolivians still speak the lan- 
guages of the Aymara kingdoms and of their Quechua conquerors; 
the society remains predominantly Indian and rural, and only a 
minority is monolingual in Spanish. Nevertheless, Spain also left 
its imprint in the political, economic, and social spheres. During 
300 years of colonial rule, Spain imposed its institutions on the 
colony and concentrated on mineral exports, which are still the back- 
bone of the Bolivian economy. Using forced Indian labor, local 
entrepreneurs extracted the mineral wealth — the silver deposits at 
Potosf were the largest in the Western world — and shipped it to 
Spain in accord with the prevailing mercantilist practices. 

After Bolivia received independence from Spain in 1825, politi- 
cal instability became endemic. Rivalries among caudillos resulted 
in numerous coups and countercoups. Despite attempts at reform 
by the nation's first three presidents, the economy did not recover 
from the disruptions caused by the wars of independence; taxes 
paid by the Indians were the main sources of income for the gov- 
ernments. 

The War of the Pacific (1879-83), in which the country lost its 
access to the sea to Chile, had a profound impact on Bolivia. Civilian 
governments replaced the erratic caudillo rule, and for fifty years 
Bolivia enjoyed relative political stability. The economy improved 
with the dramatic rise of tin as the main source of wealth. Because 
Bolivians, rather than foreigners, dominated the tin-mining industry, 
the former made most political decisions. As a result, the parties 
in power — the Conservative Party, Liberal Party, and Republican 
Party — were remarkably alike in that they were primarily interested 
in the development of the mining sector. Increasing democratiza- 
tion benefited the middle class but still excluded the Indians. 

The devastating defeat suffered by Bolivia at the hands of 
Paraguay in the Chaco War (1932-35) discredited the traditional 
leadership and brought the military back to politics. Between 1936 
and 1939, military governments tried to reform the country from 
above with a program of "military socialism" that included social 
justice and the control of the country's natural resources. In 1937 
they nationalized the Standard Oil holdings, the first such step 
taken in Latin America. Although they failed because they were 
inconsistent in their rule and unable to marshal popular support, 
these governments were important because they facilitated the 



3 



Bolivia: A Country Study 

formation of a number of new parties that, despite differences, 
agreed on the need to limit the power of the tin magnates. 

Although members of the Conservative Party attempted to stop 
the growing trend toward reform in the 1940s, they could not con- 
tain the popular discontent. Unrest in the countryside increased, 
and the middle class resented the government's inability to deal 
with economic stagnation and increasing inflation. The unifying 
force in the opposition was the Nationalist Revolutionary Move- 
ment, a primarily middle-class party that became more radical as 
it integrated the militant ideology and demands of the workers. 

Bolivia's 1952 Revolution, led by the Nationalist Revolution- 
ary Movement, was a turning point in the country's history. The 
government decreed universal suffrage without literacy or property 
requirements, an action that increased the electorate from some 
200,000 to 1 million voters. It nationalized the mines of the three 
great companies — Patifto, Hochschild, and Aramayo — and dis- 
tributed land to the campesinos under a far-reaching agrarian re- 
form. The revolution remained incomplete and lost momentum, 
however, when the government's policies produced a virtual 
bankruptcy of the economy. In exchange for massive assistance 
from the United States and the International Monetary Fund 
(IMF — see Glossary), the government agreed to cut social spend- 
ing. This action produced renewed labor unrest and eroded sup- 
port for President Victor Paz Estenssoro (1952-56, 1960-64, and 
1985-89). The government then made the fateful decision to rebuild 
the Bolivian armed forces, which had been purged and decimated 
in 1952. During the early 1960s, the military became the arbiters 
in Bolivian politics as widespread anarchy convinced many that 
only the armed forces could restore order. As a result, a military 
coup in 1964 led by General Rene Barrientos Ortufio and Gen- 
eral Alfredo Ovando Candfa had widespread support. 

The military governments in power after 1964 varied in their 
ideological outlook. The armed forces were divided by personal 
ambitions, generational differences, and regional interests and 
lacked the corporate identity of a modern military. Barrientos 's 
conservative rule (president, 1964-65; copresident, May 1965- 
January 1966; and president, 1966-69), for example, encouraged 
foreign investment and suppression of the left, whereas the 
"Revolutionary Nationalist" governments of Ovando (copresident, 
May 1965-January 1966, and president, January- August 1966 and 
1969-70) and Juan Jose Torres Gonzalez (1970-71) nationalized 
United States holdings and courted the workers, peasants, and 
students. Another conservative, Colonel Hugo Banzer Suarez 
(1971-78), was forced out because of growing opposition and pres- 
sure from the United States to reestablish democracy. The attempt 



4 



The Gateway of the Sun (La Puerta del Sol), Tiwanaku 
Courtesy Prints and Photographs Division, Library of Congress 

at a transition to democracy after 1978 failed at first because no 
single party achieved a majority in three elections, and alliances 
of various groups could not break the deadlock. Military coups, 
including one led by the ruthless and corrupt General Luis Garcia 
Meza Tejada (1980-81), overthrew civilian interim presidents. Only 
in 1982 did the military return the country to democratic gov- 
ernment. 

Pre-Columbian Civilizations 

The Bolivian highlands, permanently settled for at least 21,000 
years, were part of the culture of Andean South America before 
the arrival of the Spaniards. The records are fragmentary but sug- 
gest that agriculture started about 3000 B.C. and that the produc- 
tion of metal, especially copper, began 1,500 years later. 

By 600 B.C., the first great Andean empire had emerged on the 
high plateau between the mountains known as the Altiplano. This 
empire, the Tiwanakan, was centered near the southeastern side 
of Lake Titicaca and included urban centers around the lake, as 
well as enclaves in different ecological zones from the eastern val- 
leys to the Pacific Coast (see fig. 1). Tiwanaku was a great center 
of trade and religion, and the impact of its culture spread far be- 
yond the boundaries of present-day Bolivia. Apparendy, the Ti- 
wanakan Empire was established through colonization rather than 



5 



Bolivia: A Country Study 



through conquest. Its rapid expansion after 1000 and sudden col- 
lapse around 1200 are still poorly understood. 

The collapse of Tiwanakan influence resulted in the rise of seven 
regional kingdoms of the Aymara, the most powerful states located 
in the densely populated area around Lake Titicaca. The Aymara, 
a belligerent people who lived in fortified hilltop towns, had an ex- 
traordinary ability to adapt to the unique climatic conditions of 
the region and increased their food supply through irrigation and 
the process of freeze-drying crops. By maintaining colonists in the 
semitropical valleys on the eastern slopes of the Andes and on the 
Pacific Coast, they were able to produce both tropical and high- 
land crops. Their basic social unit was the ayllu (see Glossary), a 
kinship group or clan that organized work and distributed land 
among its members. 

The Aymara completely dominated the Uru, another major eth- 
nic group in the pre-Columbian southern Andes. Although the Uru 
might have preceded the Aymara in the region, by the twelfth cen- 
tury they were poor fishermen and landless workers. 

The Aymara, however, were not able to contain the expansion 
of the Quechua, the third major ethnic group. After the collapse 
of the Tiwanakan Empire, a Quechua- speaking state emerged in 
the area around Cuzco (in present-day Peru). In the early fifteenth 
century, the Quechua, who became known as the Incas when they 
adopted the name of their rulers, were the most powerful group 
in the northern highlands. As the Aymara kingdoms in the south 
became weaker in the second half of the fifteenth century, the Incas 
began to conquer them. 

The Bolivian highlands became known as the Kollasuyo, a 
densely populated area with great economic and mineral wealth 
that constituted one of the four administrative units of the Inca 
Empire. The highest official of the Kollasuyo was responsible only 
to the Inca (the emperor) and supervised a group of provincial 
governors, who in turn controlled members of the Aymara nobil- 
ity. Under a draft system called the mita (see Glossary), the Incas 
forced local Indians in the Kollasuyo to work in the mines or on 
construction projects or to serve in the armies, compensating them 
fully for their labor. Despite their goal of extreme centralization, 
the Incas did not fundamentally change the organization of the 
Aymara kingdoms, which remained relatively autonomous. Many 
local chiefs kept many of their former powers and were, in gen- 
eral, reinforced by Inca authority. They were also able to retain 
their culture, their local religion, and their language. The regional 
nobility, although forced to send their children to Cuzco for edu- 
cation, continued to hold private property. Moreover, the system 



6 



Historical Setting 



of sending colonists to the eastern valleys and the coast was toler- 
ated under Inca rule. 

In 1470, however, several Aymara kingdoms rebelled against 
Inca rule. The Incas completely defeated two states and pacified 
the region by sending mitimaes, Quechua- speaking colonists, to 
Aymara territory, especially to the southern valleys and to the more 
central valley regions where Cochabamba and Sucre were later 
founded. By the beginning of the sixteenth century, the Incas had 
fully established their rule over the Kollasuyo. In the 1980s, the 
legacy of this resetdement policy could be seen in the predominance 
of Quechua speakers in many areas of Bolivia (see Ethnic Groups, 
ch. 2). 

The Incas failed, however, to conquer the nomadic tribes in the 
eastern Bolivian lowlands. The remains of Incan fortresses there 
are evidence of this failure and suggest that the Incas could sub- 
due only those cultures that were primarily based on agriculture. 
Thus, the Indian groups of the eastern two-thirds of Bolivia pre- 
served their ways of life to a great extent, even after the Spanish 
conquest. 

Conquest and Colonial Rule, 1532-1809 
Conquest and Settlement 

Francisco Pizarro, Diego de Almagro, and Hernando de Luque 
led the Spanish discovery and conquest of the Inca Empire. They 
first sailed south in 1524 along the Pacific Coast from Panama to 
confirm the legendary existence of a land of gold called "Biru." 

Because the rapidly expanding Inca Empire was internally weak, 
the conquest was remarkably easy. After the Inca Huayna Capac 
died in 1527, his sons Huascar and Atahualpa fought over the suc- 
cession. Although Atahualpa defeated his brother, he had not yet 
consolidated his power when the Spaniards arrived in 1532, and 
he seriously misjudged their strength. Atahualpa did not attempt 
to defeat Pizarro when he arrived on the coast in 1532 because the 
Incan ruler was convinced that those who commanded the moun- 
tains also controlled the coast. When Pizarro formed alliances with 
Indians who resented Inca rule, Atahualpa did not modify the Inca 
ceremonial approach to warfare, which included launching attacks 
by the light of the full moon. On November 16, 1532, Pizarro took 
Atahualpa prisoner during their first encounter and later executed 
him, even after payment of a ransom equivalent to half a century 
of European production of gold and silver. One year later, Cuzco fell. 

Despite Pizarro 's quick victory, Indian rebellions soon began and 
continued periodically throughout the colonial period. In 1537 Manco 



7 



Bolivia: A Country Study 

Inca, whom the Spanish had established as a puppet emperor, re- 
belled against the new rulers and restored a "neo-Inca" state. This 
state continued to challenge Spanish authority even after the Spanish 
suppressed the revolt and beheaded Tupac Amaru in the public 
square of Cuzco in 1572. Later revolts in the Bolivian highlands 
were usually organized by the elders of the community and re- 
mained local in nature, the exception being the great rebellion of 
Tupac Amaru II in the eighteenth century. 

During the first two decades of Spanish rule, the settlement of the 
Bolivian highlands — now known as Upper (Alto) Peru or Charcas — 
was delayed by a civil war between the forces of Pizarro and those 
of Almagro. The two conquistadors had divided the Incan terri- 
tory, with the north under the control of Pizarro and the south 
under that of Almagro. Fighting broke out in 1537, however, when 
Almagro seized Cuzco after suppressing the Manco Inca rebellion. 
Pizarro defeated and executed Almagro in 1538 but was himself 
assassinated three years later by former supporters of Almagro. 
Pizarro 's brother Gonzalo assumed control of Upper Peru but soon 
became embroiled in a rebellion against the Spanish crown. Only 
with the execution of Gonzalo Pizarro in 1 548 did Spain succeed 
in reasserting its authority; later that year, colonial authorities es- 
tablished the city of La Paz, which soon became an important com- 
mercial and transshipment center. 

Indian resistance delayed the conquest and settlement of the 
Bolivian lowlands. The Spanish established Santa Cruz de la Sierra 
(hereafter, Santa Cruz) in 1561 , but the Gran Chaco, the colonial 
name for the arid Chaco region, remained a violent frontier 
throughout colonial rule. In the Chaco, the Indians, mostly 
Chiri guano, carried out unrelenting attacks against colonial set- 
tlements and remained independent of direct Spanish control. 

The Economy of Upper Peru 

Spain immediately recognized the enormous economic poten- 
tial of Upper Peru. The highlands were rich in minerals, and Potosi 
had the Western world's largest concentration of silver. The area 
was heavily populated and hence could supply workers for the sil- 
ver mines. In addition, Upper Peru could provide food for the 
miners on the Altiplano. 

Despite these conditions, silver production fluctuated dramati- 
cally during the colonial period. After an initial fifteen-year surge 
in production, output began to fall in 1560 as a result of a severe 
labor shortage caused by the Indian population's inability to resist 
European diseases. Around the same time, Potosi 's rich surface 
deposits became depleted, which meant that even more labor would 



8 




Sixteenth- century woodcut of Potosi Hill, 
also called Rich Hill (Cerro Rico) 

be required to extract silver. The labor shortage was addressed by 
Francisco de Toledo, the energetic viceroy (the king's personal 
representative) of Peru, during a visit to Upper Peru in the 1570s. 
Toledo used the pre-Columbian mita to extract forced labor for the 
mines at Potosi from some sixteen districts in the highlands, which 
were designated as areas supplying mita. Adult males could be re- 
quired to spend every sixth year working in the mines. Henceforth, 
Potosi mining depended on the mita as well as on a labor system 
in which relatively free men worked alongside those who were 
coerced. Toledo also regulated the mining laws, established a mint 
at Potosi, and introduced the mercury amalgam process. Adoption 
of the amalgam process was particularly important, according to 
Herbert S. Klein, in that it eliminated Indian control over refining. 

The second problem, the exhaustion of the high-content surface 
ores, required technological innovations. Hydraulic power took on 
increased importance because of the construction of large refining 
centers. By 1621 a system of artificial lakes with a storage capacity 
of several million tons provided a steady supply of water for refiner- 
ies. With the labor and technological problems resolved, silver min- 
ing flourished. By the middle of the seventeenth century, silver 
mining at Potosi had become so important that the city had the 
largest population in the Western Hemisphere, approximately 
160,000 inhabitants. 



9 



Bolivia: A Country Study 

The end of the seventeenth-century boom, however, was followed 
by a major decline in the mining industry. The exhaustion of the 
first rich veins required deeper and more expensive shafts. The 
rapid decrease of the Indian population as a result of disease and 
exploitation by the mita also contributed to the reduction in silver 
output. After 1700 only small amounts of bullion from Upper Peru 
were shipped to Spain. 

Kings from the Bourbon Dynasty in Spain tried to reform the 
colonial economy in the mid-eighteenth century by reviving min- 
ing. The Spanish crown provided the financial support necessary 
to develop deeper shafts, and in 1736 it agreed to lower the tax 
rate from 20 to 10 percent of the total output. The crown also helped 
create a minerals purchasing bank, the Banco de San Carlos, in 
1751 and subsidized the price of mercury to local mines. The foun- 
dation of an academy of metallurgy in Potosf indicated the crown's 
concern with technical improvements in silver production. The 
attempts to revive the mining sector in Upper Peru were only par- 
tially successful, however, and could not halt the economic collapse 
of Potosf at the beginning of the nineteenth century. Nevertheless, 
mining remained critical to the economy of Upper Peru because 
food supplies sent from the valleys to mining centers on the Altiplano 
influenced agricultural production. 

Farming at first took place on encomiendas (see Glossary). The 
crown granted a small number of conquistadors the right to the 
labor and produce of Indians living on the encomienda, and by the 
1650s there were some eighty-two encomiendas in Upper Peru. En- 
comenderos tended to monopolize agricultural production, control 
the cheap Indian labor, and collect the tribute that the Indians had 
to pay to the crown. Because encomenderos were difficult to control 
and abused their laborers, however, the crown tried repeatedly to 
bring Indians under its direct jurisdiction and control. 

In the second half of the seventeenth century, agricultural produc- 
tion shifted from encomiendas to large estates, on which Indians 
worked in exchange for the use of land. Cochabamba became a 
major producer of corn and wheat, and the valleys produced coca 
leaves in increasing amounts during colonial rule. 

In addition to mining and agricultural production, Indian trib- 
ute (alcabala) became an increasingly important source of income 
for the crown despite Indian migration to avoid payment. An early 
effort to collect tribute from Indians by moving them into villages 
or indigenous communities (comunidades indigenas) was unsuccess- 
ful because of resistance from both encomenderos and Indians. But 
by the late eighteenth century, an increase in the Indian popula- 
tion, the extension of tribute payments to all Indian males (including 



10 



Historical Setting 



those who owned land), and a relative decline in income from the 
mines combined to make alcabala the second largest source of in- 
come in Upper Peru. Tribute payments also increased because 
Spanish absolutism made no concessions to human misfortune, such 
as natural disasters. The Indian tribute was increased by 1 million 
pesos annually. 

State, Church, and Society 

The longevity of Spain's empire in South America can be ex- 
plained partly by the successful administration of the colonies. Spain 
was at first primarily interested in controlling the independent- 
minded conquerors, but its main goal soon became maintaining 
the flow of revenue to the crown and collecting the tribute of goods 
and labor from the Indian population. To this end, Spain soon 
created an elaborate bureaucracy in the New World in which vari- 
ous institutions served as watchdogs over each other and local offi- 
cials had considerable autonomy. 

Upper Peru, at first a part of the Viceroyalty of Peru, joined 
the new Viceroyalty of Rio de la Plata (whose capital was Buenos 
Aires) when it was created in 1776 (see fig. 2). The viceroy was 
aided by the audiencia (council), which was simultaneously the 
highest court of appeal in the jurisdiction and, in the absence of 
the viceroy, also had administrative and executive powers. The 
wealth of Upper Peru and its remoteness from Lima convinced the 
authorities in Lima to create an audiencia in the city of Chuquisaca 
(present-day Sucre) in 1558. Chuquisaca had become particularly 
important as Potosfs administrative and agricultural supply center. 
The jurisdiction of the audiencia, known as Charcas, initially covered 
a radius of 100 "leagues" (179,600 hectares) around Chuquisaca, 
but it soon included Santa Cruz and territory belonging to present- 
day Paraguay and, until 1568, also the entire district of Cuzco. 
The president of the audiencia had judicial authority as well as ad- 
ministrative and executive powers in the region, but only in rou- 
tine matters; more important decisions were made in Lima. This 
situation led to a competitive attitude and the reputation of Upper 
Peru for assertiveness, a condition reinforced by the economic im- 
portance of the region. 

Spain exercised its control of smaller administrative units in the 
colonies through royal officials, such as the corregidor (see Glossary), 
who represented the king in the municipal governments that were 
elected by their citizens. By the early seventeenth century, there 
were four corregidores in Upper Peru. 

In the late eighteenth century, Spain undertook an administra- 
tive reform to increase revenues of the crown and to eliminate a 



11 



Bolivia: A Country Study 




Lima 



Tocific 
Ocean 



Santiago 




VICEROY ALTY 
OF BRAZIL 




Atlantic 

Kjo de (a Tlata OcCdtl 



Q 





Colonial boundary 


• 


Populated place 




River 




Spanish territory 


1 1 


Portuguese territory 




Possession disputed by 


Britain and Spain 


400 


800 Kilometers 


400 800 Miles 



Source: Based on information from A. Curtis Wilgus, Historical Atlas of Latin America, New 
York, 1967, 112. 



Figure 2. Three South American Viceroy alties, ca. 1800 

number of abuses. It created an intendancy system, giving exten- 
sive powers to highly qualified officials who were directly respon- 
sible to the king. In 1784 Spain established four intendancies in 
Upper Peru, covering the present-day departments of La Paz, 
Cochabamba, Potosi, and Chuquisaca. 

The Spanish crown at first controlled the local governments in- 
directly but centralized procedures as time went on. At first, Viceroy 
Francisco de Toledo confirmed the rights of local nobles and guaran- 
teed them local autonomy. But the crown eventually came to em- 
ploy Spanish officials, corregidores de indios, to collect tribute and taxes 



12 



Historical Setting 



from the Indians. Corregidores de indios also imported goods and forced 
the Indians to buy them, a widely abused practice that proved to 
be an enormous source of wealth for these officials but caused much 
resentment among the Indian population. 

With the first settlers in Upper Peru came the secular and regu- 
lar clergy to begin the conversion of the Indians to Christianity. 
In 1552 the first bishopric in Upper Peru was established in La 
Plata; in 1605 La Paz and Santa Cruz also became bishoprics. In 
1623 the Jesuits established the Royal and Pontifical Higher Univer- 
sity of San Francisco Xavier of Chuquisaca, Upper Peru's first 
university. 

Indian reaction to colonial rule and conversion to Christianity 
varied. Many Indians adapted to Spanish ways by breaking with 
their traditions and actively attempting to enter the market econ- 
omy. They also used the courts to protect their interests, especially 
against new tribute assessments. Others, however, clung to their 
customs as much as possible, and some rebelled against the white 
rulers. Local, mostly uncoordinated, rebellions occurred through- 
out colonial rule. More than 100 revolts occurred in the eighteenth 
century alone in Bolivia and Peru. 

Although the official Incan religion disappeared rapidly, the 
Indians continued their local worship under the protection of local 
Indian rulers. But as Christianity influenced the Indians, a new 
folk-Catholicism developed, incorporating symbols of the indigenous 
religion (see Religion, ch. 2). Whereas early Indian rebellions were 
anti-Christian, the revolts at the end of the sixteenth century were 
based in messianic Christian symbolism that was Roman Catho- 
lic and anti-Spanish. The church was tolerant of local Indian reli- 
gions. In 1582, for example, the bishop of La Plata permitted the 
Indians to build a sanctuary for the dark Virgen de Copacabana 
on the shores of Lake Titicaca (Copacabana has been a traditional 
Aymara religious center ever since). 

The conquest and colonial rule were traumatic experiences for 
the Indians. Easily susceptible to European diseases, the native 
population decreased rapidly. The situation of the Indians wors- 
ened in the eighteenth century when Spain demanded higher trib- 
ute payments and increased mita obligations in an attempt to 
improve the mining output. 

These profound economic and social changes and the breakup 
of native culture contributed to the increasing addiction of Indi- 
ans to alcohol. Before the Spanish arrived, the Incas had consumed 
alcohol only during religious ceremonies. Indian use of the coca 
leaf also expanded, and, according to one chronicler, at the end 
of the sixteenth century "in Potosf alone, the trade in coca amounts 



13 



Bolivia: A Country Study 

to over half a million pesos a year, for 95,000 baskets of it are 
consumed." 

Increasing Indian discontent with colonial rule sparked the great 
rebellion of Tupac Amaru II. Born Jose Gabriel Condorcanqui, 
this educated, Spanish- speaking Indian took the name of his an- 
cestor, Tupac Amaru. During the 1770s, he became embittered 
over the harsh treatment of the Indians by the corregidores de indios. 
In November 1780, Tupac Amaru II and his followers seized and 
executed a particularly cruel corregidor de indios. Although Tupac 
Amaru II insisted that his movement was reformist and did not 
seek to overthrow Spanish rule, his demands included an autono- 
mous region. The uprising quickly became a full-scale revolt. Ap- 
proximately 60,000 Indians in the Peruvian and Bolivian Andes 
rallied to the cause. After scoring some initial victories, including 
defeating a Spanish army of 1 ,200 men, Tupac Amaru II was cap- 
tured and killed in May 1781; nonetheless, the revolt continued, 
primarily in Upper Peru. There, a supporter of Tupac Amaru II, 
the Indian chief Tomas C atari, had led an uprising in Potosf dur- 
ing the early months of 1780. Catari was killed by the Spaniards 
a month before Tupac Amaru II. Another major revolt was led 
by Julian Apasa, a sexton who took the names of the two rebel 
martyrs by calling himself Tupac Catari (also spelled Katari). He 
besieged La Paz for more than 100 days. Spain did not succeed 
in putting down all of the revolts until 1783 and then proceeded 
to execute thousands of Indians. 

In the late eighteenth century, a growing discontent with Span- 
ish rule developed among the criollos (persons of pure Spanish de- 
scent born in the New World). Criollos began to assume active roles 
in the economy, especially in mining and agricultural production, 
and thus resented the trade barriers established by the mercantilist 
policies of the Spanish crown. In addition, criollos were incensed 
that Spain reserved all upper-level administrative positions for penin- 
sulares (Spanish-born persons residing in the New World). 

The Enlightenment, with its emphasis on reason, questioning 
of authority and tradition, and individualistic tendencies, also con- 
tributed to criollo discontent. The Inquisition had not kept the writ- 
ings of Niccolo Machiavelli, Benjamin Franklin, Thomas Paine, 
Jean-Jacques Rousseau, John Locke, and others out of Spanish 
America; their ideas were often discussed by criollos, especially those 
educated at the university in Chuquisaca. At first the criollos of 
Upper Peru were influenced by the French Revolution, but they 
eventually rejected it as too violent. Although Upper Peru was fun- 
damentally loyal to Spain, the ideas of the Enlightenment and 



14 



A convent in Daniel Campos Province, Potosi Department 
Courtesy Inter-American Foundation (Kevin Healy) 

independence from Spain continued to be discussed by scattered 
groups of radicals. 

Independence from Spain and the Early National 
Period, 1809-39 

Struggle for Independence 

The invasion of the Iberian Peninsula in 1807-08 by Napoleon's 
forces proved critical to the independence struggle in South Amer- 
ica. The overthrow of the Bourbon Dynasty and the placement of 
Joseph Bonaparte on the Spanish throne tested the loyalty of the 
local elites in Upper Peru, who were suddenly confronted with sev- 
eral conflicting authorities. Most remained loyal to Spain. Taking 
a wait-and-see attitude, they supported the Junta Central (Cen- 
tral Junta) in Spain, a government in the name of the abdicated 
Ferdinand VII. Some liberals eagerly welcomed the reforms of 
colonial rule promised by Joseph Bonaparte. Others supported the 
claims of Carlota, Ferdinand's sister, who governed Brazil with 
her husband, Prince Regent John of Portugal. Finally, a number 
of radical criollos wanted independence for Upper Peru. 

This conflict of authority resulted in a local power struggle in 
Upper Peru between 1808 and 1810 and constituted the first phase 
of the efforts to achieve independence. In 1808 the president of 



15 



Bolivia: A Country Study 

the audiencia, Ramon Garcia Leon de Pizarro, demanded affilia- 
tion with the Junta Central. The conservative judges of the audien- 
cia were influenced, however, by their autocratic royalist philosophy 
and refused to recognize the authority of the junta because they 
saw it as a product of a popular rebellion. On May 25, 1809, ten- 
sions grew when radical criollos, also refusing to recognize the junta 
because they wanted independence, took to the streets. This revolt, 
one of the first in Latin America, was soon put down by the 
authorities. 

On July 16, 1809, Pedro Domingo Murillo led another revolt 
by criollos and mestizos (those of mixed European and Indian an- 
cestry) in La Paz and proclaimed an independent state in Upper 
Peru in the name of Ferdinand VII. The loyalty to Ferdinand was 
a pretense used to legitimize the independence movement. By 
November 1809, Cochabamba, Oruro, and Potosi had joined 
Murillo. Although the revolt was put down by royalist forces sent 
to La Paz by the viceroy of Peru and to Chuquisaca by the viceroy 
of Rio de La Plata, Upper Peru was never again completely con- 
trolled by Spain. 

During the following seven years, Upper Peru became the battle- 
ground for forces of the independent Argentine Republic and 
royalist troops from Peru. Although the royalists repulsed four 
Argentine invasions, guerrillas controlled most of the countryside, 
where they formed six major republiquetas, or zones of insurrection. 
In these zones, local patriotism would eventually develop into the 
fight for independence. 

By 1817 Upper Peru was relatively quiet and under the control 
of Lima. After 1820 the Conservative Party criollos supported 
General Pedro Antonio de Olaneta, a Charcas native, who refused 
to accept the measures by the Spanish Cortes (legislature) to con- 
ciliate the colonies after the Liberal Party revolution in Spain. 
Olaneta, convinced that these measures threatened royal author- 
ity, refused to join the royalist forces or the rebel armies under the 
command of Simon Bolivar Palacios and Antonio Jose de Sucre 
Alcala. Olaneta did not relinquish his command even after the Peru- 
vian royalists included him and his forces in the capitulation agree- 
ment following their defeat in the Battle of Ayacucho in 1824, the 
final battle of the wars of independence in Latin America. Olaneta 
continued a quixotic war until Sucre's forces defeated his forces, 
and he was killed by his own men on April 1, 1825, in a battle 
that effectively ended Spanish rule in Upper Peru. 

Construction of Bolivia: Bolivar, Sucre, and Santa Cruz 

In 1825 Bolivar, first president of what became known as Bolivia, 
transferred authority over Upper Peru to his lieutenant, Sucre 



16 



Historical Setting 



(1825-28), who called a constituent assembly in Chuquisaca to de- 
termine the future of the region. Almost all delegates wanted an 
independent Upper Peru and rejected attachment to Argentina or 
Peru. On August 6, 1825, the assembly adopted a declaration of 
independence. Five days later, the assembly, hoping to placate 
Bolivar's reservations about the independence of Upper Peru, 
resolved to name the new nation after him. 

The new Republic of Bolivia, created in the territory that had 
formed the audiencia of Charcas, faced profound problems. The wars 
of independence had disrupted the economy. The entire mining 
industry was in decline because of destruction, flooding, and aban- 
donment of mines. Lack of investment and scarcity of labor con- 
tributed to a sharp drop in silver production. Agricultural 
production was low, and Bolivia had to import food, even staples 
consumed by the Indian population. The government had serious 
financial difficulties because of the huge military expenditures and 
debt payments to Peru as compensation for the army of liberation. 
All these problems were aggravated by the isolation of the new 
republic from the outside world and the difficulties of securing its 
borders. 

Bolivar entered La Paz triumphantly on August 8, 1825. Dur- 
ing his brief rule of less than five months, he issued a flood of 
decrees, resolutions, and orders reflecting his ideas about govern- 
ment. He declared the equality of all citizens and abolished the 
tribute payments, replacing them with a "direct contribution" (con- 
tribution directa) that amounted to less than half of the previous pay- 
ments. Bolivar also decreed a land reform to distribute land, 
preferably to Indians, and tried to reduce the influence of the 
Roman Catholic Church in politics. Most of his decrees could not 
be implemented during his short tenure, but they were included 
in the constitution he wrote for Bolivia after his departure in January 
1826. 

Despite his efforts at reform, Bolivar was outspoken about his 
doubts as to the ability of Bolivians to govern themselves. He was 
careful to avoid recognizing Bolivia's independence, always refer- 
ring to the country as Upper Peru and signing his decrees as dic- 
tator of Peru. Only in January 1826, when he turned the country 
over to Sucre, did he promise that the Peruvian legislature would 
approve Bolivia's independence. 

Sucre succeeded Bolivar in January 1826 and continued to rule 
by decree. He was formally installed as Bolivia's first elected 
president after the Constituent Assembly convened in May and 
elected him. During his three-year rule, the government tried to 
solve its grave financial problems, which were aggravated by the 



17 



Bolivia: A Country Study 



lack of foreign credit. Sucre reformed the existing tax structure in 
an effort to finance public expenditures and tried to revive silver 
mining by attracting foreign capital and technology. In one of the 
most radical attacks on the church anywhere in Latin America, 
he confiscated church wealth in Bolivia and closed down many 
monasteries. The Roman Catholic Church in Bolivia never recov- 
ered the powerful role that it had held. Import duties and taxes 
on the internal movement of goods were also important sources 
of state revenue. In addition, Sucre reestablished tribute payments 
in an attempt to solve the country's financial crisis. 

Sucre's attempts at reform were only partially successful because 
Bolivia lacked the administration to carry them out. Many Con- 
servative Party criollos turned away when his reforms threatened 
to challenge the economic and social patterns of the colonial past. 
As opposition increased, the local nationalist elite came to resent 
the leadership of their Venezuelan-born president. The invasion 
of Bolivia by the Peruvian general Agustm Gamarra and an as- 
sassination attempt in April 1827 led to Sucre's resignation in 1828. 
Sucre left the country for voluntary exile, convinced that "the so- 
lution was impossible." Given troop command by Bolivar, however, 
Sucre routed General Gamarra 's much larger force (8,000) in a 
decisive battle at Tarqui on February 27, 1829. 

Despite the fall of his government, Sucre's policies formed the 
basis for the ten-year rule of Andres de Santa Cruz y Calahumana 
(1829-39), the first native-born president, who was sworn into office 
in May 1829 after a series of short-term rulers. Santa Cruz, a mes- 
tizo, had a brilliant military career fighting for independence in 
the armies of Bolivar. His close connection with Bolivar had led 
to a short interlude as the president of Peru in 1826. It also made 
him a strong candidate to become Bolivia's new president after 
Sucre's resignation. 

Santa Cruz created a relatively stable economic, social, and po- 
litical order in Bolivia. In an attempt to overcome Bolivia's isola- 
tion, Santa Cruz opened the port of Cobija on the Pacific Coast. 
He also devalued the silver currency to finance government ac- 
tivities, instituted protective tariffs in support of the local cotton 
cloth (tucuyo) industry, and reduced the mining tax, thereby in- 
creasing mining output. In addition, Santa Cruz codified the coun- 
try's laws and enacted Latin America's first civil and commercial 
codes. The Higher University of San Andres in La Paz was also 
founded during his rule. Although Santa Cruz approved a demo- 
cratic constitution, he ruled virtually as a dictator and did not 
tolerate opposition. 



18 



Historical Setting 



Santa Cruz continued his political ambitions in Peru while presi- 
dent of Bolivia. He established the Peru-Bolivia Confederation in 
1836, justifying his act with the threat of Chile's expansion to the 
north. This threat, together with the constant turmoil in Peru and 
repeated attempts by Gamarra to invade Bolivia, had made Sucre's 
military intervention in a Peruvian civil war in 1835 a matter of 
life and death for Bolivia. After winning a number of battles in 
Peru, Santa Cruz reorganized that country into two autonomous 
states — Northern Peru and Southern Peru — and joined them with 
Bolivia in the Peru-Bolivia Confederation with himself as protec- 
tor. The potential power of this confederation aroused the opposi- 
tion of Argentina and, above all, Chile; both nations declared war 
on the confederation. Although Santa Cruz repelled an attack by 
Argentina, he failed to stop the Chilean expansion into the dis- 
puted territories on its northern frontier. His decisive defeat by 
Chilean forces in the Battle of Yungay in January 1839 resulted 
in the breakup of the confederation and ended the career of Bolivia's 
ablest nineteenth-century president. Santa Cruz went into exile in 
Ecuador. 

Political Instability and Economic Decline, 1839-79 

Bolivia was characterized for the forty years after 1839 by a 
chaotic political situation and a declining economy. The country 
relied on taxes paid by the Indians as its main source of income. 
Although some of the government's leaders during this period 
tried to reform the country, most fit the description of caudillos 
bdrbaros (barbaric caudillos), a term used by Bolivian writer Alcides 
Arguedas for inept and corrupt rulers. 

Santa Cruz was succeeded in June 1839 by General Jose Miguel 
de Velasco Franco (1828, 1829, and 1839-41), who tried to con- 
trol the political intrigues and maneuvering between the support- 
ers and opponents of Santa Cruz. After failing to repel yet another 
invasion by Gamarra, Velasco was overthrown. Gamarra was killed 
in November 1841 near La Paz in the Battle of Ingavi, in which 
General Jose Ballivian y Segurola defeated the Peruvian forces and 
ended Peruvian expansionism. 

Ballivian y Segurola (1841-47) is remembered for restoring rela- 
tive calm to the nation between 1842 and 1847. Reversing Santa 
Cruz's protectionist policies, Ballivian y Segurola encouraged free 
trade. He also promoted the colonization of the Beni. Nonethe- 
less, the main income continued to come from the taxes paid by 
rural Indians. These included not only a head tax but also a tax 
on coca leaves, which were consumed almost exclusively by the 
Indian population. Although nearly 90 percent of all Bolivians lived 



19 



Bolivia: A Country Study 

in rural areas according to the 1846 census, agriculture generated 
little revenue. Most haciendas stagnated, and only the collection 
of cinchona bark (for the production of quinine) and coca leaves 
increased in the valleys. 

After the overthrow of Ballivian y Segurola in 1847, Manuel 
Isidoro Belzu Humerez (1848-55) emerged as the most powerful 
figure in Bolivia. Unlike his predecessors, Belzu sought the sup- 
port of the masses. In order to gain the backing of the Indians, 
he started a campaign against the aristocratic landowners, seized 
their land, and incited the Indians to destroy the homes of the land- 
owners. He also hoped to get the support of the artisans who had 
been hurt by the free-trade policies of Ballivian y Segurola by re- 
stricting the role of foreign merchants in Bolivia and limiting 
imports. 

Belzu 's effort succeeded in one sense because he fended off forty- 
two coup attempts during his rule. "Tata" Belzu, as he was called 
by the Indians (like the head of the ayllu in pre-Columbian times), 
has been seen as the precursor of Andean populism. Attempting 
to stir the masses in demagogic speeches, Belzu completely alienated 
the Bolivian establishment with his reign of terror. As efforts to 
overthrow him increased, he resigned in 1855 and left for Europe. 

Jose Maria Linares Lizarazu (1857-61), a member of the elite 
that had opposed Belzu, overthrew Belzu 's son-in-law, General 
Jorge Cordova (1855-57), and became the first civilian president. 
Linares reversed Belzu' s protective policies and encouraged free 
trade and foreign investment, mainly from Britain and Chile. Dur- 
ing his presidency, mining output increased because of technolog- 
ical innovations, such as the steam engine, and the discovery of 
huge nitrate deposits in the Atacama Desert (in present-day Chile). 

Although the mining sector improved, it failed to stimulate 
agricultural production, and most haciendas continued in a rela- 
tive state of stagnation. This malaise contributed to the survival 
of campesino communities during the nineteenth century, despite 
repeated assaults on their common landholdings by various govern- 
ments. But the tax burden on the Indians resulted in campesino 
revolts in Copacabana. 

The overthrow of Linares by a military coup in 1861 initiated 
one of the most violent periods in Bolivian history, under General 
Jose Maria de Acha Valiente (1861-64). Acha is remembered for 
the "murders of Yanez," the massacre of seventy-one Belzu sup- 
porters (Belcistas), including General Cordova, ordered by Colonel 
Placido Yanez, the military commander in La Paz, in 1861. 

In late 1864, General Mariano Melgarejo Valencia (1864-71) 
seized the presidency and became the most notorious of Bolivia's 



20 



Aymara Indians playing wind instruments in Achispaya, 
Larecaja Province, La Paz Department 
A Tinku ritual fight in Macha, Chayanta Province, Potosi Department 
Photos courtesy Inter-American Foundation (Kevin Healy) 



21 



Bolivia: A Country Study 

caudillos. Relying primarily on the military, he remained in power 
for more than six years despite his mismanagement, drunkenness, 
and corruption, as well as constant intrigues against him. Hoping 
to improve the economy by opening up the country to foreigners, 
Melgarejo signed a series of treaties with Chile and Peru for free 
trade. In an 1867 treaty with Brazil to secure water rights to the 
Atlantic Ocean, he ceded 102,400 square kilometers of territory, 
hoping to break Bolivia's isolation (see fig. 3). 

Melgarejo started a formidable assault on Indian communal land, 
ostensibly in order to improve agricultural production. He decreed 
that the Indians were the owners of their parcels only if they paid 
a large fee within sixty days. If they failed to do so, their land would 
be auctioned off. The resulting sales increased the size of the ha- 
ciendas, and massive Indian uprisings against his rule became more 
violent. Opposition against Melgarejo mounted in all sectors of so- 
ciety as the term melgarejismo came to signify amoral militarism; 
in 1871 he was overthrown and later murdered in Lima. 

Agustm Morales Hernandez (1871-72) continued Melgarejo' s 
ruling style, despite his promise of "more liberty and less govern- 
ment. " Morales was assassinated, however, by a nephew in 1873. 
Two presidents with high integrity, Tomas Frias Ametller (1872-73) 
and General Adolfo Ballivian (1873-74), did not last long because 
of constant intrigues. Under their rule, Bolivia opened the port 
of Mollendo in Peru, which reduced the country's isolation by con- 
necting the Altiplano by train and steamship on Lake Titicaca to 
the Pacific Coast. But in 1876 Hilarion Daza Groselle (1876-79) 
seized power and became another military caudillo, as brutal and 
incompetent as Melgarejo. He faced many insurrections, a mas- 
sive demonstration by artisans in Sucre, and widespread opposi- 
tion. Hoping to gather the support of nationalist Bolivians to 
strengthen his internal position, Daza involved his country in the 
disastrous War of the Pacific. 

From the War of the Pacific to the Chaco War, 
1879-1935 

War of the Pacific 

The War of the Pacific resulted from a dispute between Bolivia 
and Chile over sovereignty of the mineral-rich coastal area of the 
Atacama Desert. In the mid- 1860s, the two nations had come to 
the brink of war because of disagreement over their boundaries. 
In 1874 Chile agreed to fix the border at 24° south latitude in return 
for Bolivia's promise not to increase taxes on Chilean nitrate 
enterprises for twenty-five years. But in 1878, Daza imposed a slight 



22 



Historical Setting 



increase on export taxes. Chile immediately objected, and when 
Daza refused to revoke the tax hike, Chile landed troops on Febru- 
ary 14, 1879. Bolivia, in alliance with Peru, declared war on Chile 
on March 1, but Bolivia's troops in the coastal territory were easily 
defeated, in part because of Daza's military incompetence. Driven 
from office by a popular revolt, Daza fled to Europe with a sizable 
portion of Bolivia's treasury. The attempt of General Narcisco 
Campero Leyes (1880-84) to come to the aid of Peru, Bolivia's 
ally in the war, was unsuccessful, and the combined armies were 
defeated by Chile in 1880. Having lost its entire coastal territory, 
Bolivia withdrew from the war. It ceded the territory officially to 
Chile twenty-four years later, in 1904, under the Treaty of Peace 
and Friendship. 

The War of the Pacific was a turning point in Bolivian history. 
Bolivian politicians were able to rally Bolivians by blaming the war 
on Chilean aggression. Bolivian writers were convinced that Chile's 
victory would help Bolivia to overcome its backwardness because 
the defeat strengthened the "national soul." Even today, Bolivia 
has not relinquished the hope of regaining an outlet to the Pacific 
Ocean. 

After the war, a vigorous debate among civilian elites spawned 
the development of new political parties. Mining entrepreneurs, 
who had become the most important economic group in the coun- 
try because of increasing production, created the Conservative Party 
(Partido Conservador). Conservatives favored reaching a quick 
peace settlement with Chile that would include indemnification for 
lost territories and enable Bolivia to construct a railroad for min- 
ing exports. The Liberal Party (Partido Liberal) denounced the 
pacifism of the Conservatives. It also resented the economic de- 
pendence of the mining sector on Chilean and British capital and 
hoped to attract United States investment. Despite these differences, 
both parties were primarily interested in political and economic 
modernization, and their ideological outiooks were similar. Civilian 
politicians reorganized, reequipped, and professionalized the dis- 
credited armed forces and tried to subject them to civilian control. 
Still, both Conservatives and Liberals initially supported military 
candidates for the presidency. The governments in power from 
1880 to 1920 — elected by a small, literate, and Spanish-speaking 
electorate — brought Bolivia its first relative political stability and 
prosperity. 

Reconstruction and the Rule of the Conservatives 

The Conservatives ruled Bolivia from 1880 until 1899. General 
Campero completed his legal term in office and presided over free 



23 



Bolivia: A Country Study 



BRAZIL 



PERU 



Bolivia's present-day 

boundary 
Boundary of 
territorial losses 
® National capital 
1 | Ceded to Brazil, 1867 
I . * J Ceded to Chile, 1904 
HH Ceded to Brazil, 1903 

Ceded to Paraguay, 
1938 



A 



CHILE 



BRAZIL 



South 
(Pacific 
Ocean 



ARGENTINA 




Figure 3. Major Bolivian Territorial Losses, 1867-1938 



elections in 1884 that brought to power Gregorio Pacheco Leyes 
(1884-88), one of Bolivia's most important mine owners. After 
Pachecho's term, however, fraudulent elections resulted repeatedly 
in Liberal revolts. Although the Liberal Party was allowed to par- 
ticipate in the National Congress (hereafter, Congress), it had no 
chance to win a presidential election. 

Under the Conservatives, the high world price of silver and in- 
creased production of copper, lead, zinc, and tin combined to cre- 
ate a period of relative prosperity. The Conservative governments 
encouraged the mining industry through the development of a rail 
network to the Chilean coast. The growth of commercial agricul- 
ture, such as the development of Bolivia's natural rubber resources, 
also contributed to an apparently stronger economy. Agricultural 
production in the highlands increased as the haciendas expanded 
in some regions. 

24 



Historical Setting 



Aniceto Arce Ruiz (1888-92), although elected legally, was an 
autocrat who managed to stay in power only through repression. 
His main economic accomplishment was to extend the Antofagasta- 
Calama Railroad to Oruro. The extension of the railroad drasti- 
cally reduced the cost of transporting minerals to the Pacific Coast. 
Economic growth was skewed, however, as railroads that were built 
to export minerals started to bring imported wheat from Chile; in 
1890 Chilean wheat was cheaper in La Paz than wheat from 
Cochabamba. The open economy also hurt local industry. The ex- 
pansion of the haciendas at the expense of the free Indian commu- 
nities resulted in numerous uprisings and forced many Indians to 
work for their landlords or to migrate to the cities. As a result of 
this migration, the census of 1900 noted an increase of the mestizo 
population, but Bolivia remained a predominantly Indian and rural 
nation, in which the Spanish-speaking minority continued to ex- 
clude the Indians. 

The Liberal Party and the Rise of Tin 

In 1899 the Liberal Party overthrew the Conservatives in the 
"Federal Revolution." Although the Liberals resented the long 
rule of the Conservatives, the main reasons for the revolt were 
regionalism and federalism. The Liberal Party drew most of its 
support from the tin-mining entrepreneurs in and around La Paz, 
whereas Conservative governments had ruled with an eye on the 
interests of the silver mine owners and great landowners in Potosi 
and Sucre. The immediate cause of the conflict was the Liberal 
demand to move the capital from Sucre to the more developed La 
Paz. 

The Federal Revolution differed from previous revolts in Bolivia 
in that Indian peasants actively participated in the fighting. Indian 
discontent had increased because of the massive assault on their 
communal landholdings. The campesinos supported the Liberal 
leader, Jose Manuel Pando, when he promised to improve their 
situation. 

Pando, however, reneged on his promises and allowed the as- 
sault on Indian land to continue. The government suppressed a 
series of campesino uprisings and executed the leaders. One of these 
revolts, led by Pablo Zarate Willka, was one of the largest Indian 
rebellions in the history of the republic. It frightened whites and 
mestizos, who once again successfully isolated the Indians from na- 
tional life. 

Like their Conservative predecessors, the Liberals controlled 
the presidential elections but left the elections for Congress rela- 
tively free. They also continued to professionalize the Bolivian 



25 



Bolivia: A Country Study 

military, with the aid of a German military mission (see Evolution 
of the Military Role in Society and Government, ch. 5). President 
Ismael Montes Gamboa (1904-09 and 1913-17) dominated the 
Liberal era. 

Liberal administrations gave priority to the settlement of border 
disputes. Bolivia's inability to protect and integrate the frontier 
with Brazil had led to the encroachment of Brazilian rubber 
gatherers. In 1900 they began an active secessionist movement in 
the eastern province of Acre and after three years of small-scale 
fighting won annexation by Brazil. In the Treaty of Petropolis in 
1903, Bolivia relinquished its claims to 191,000 square kilometers 
of Acre territory in return for two areas on the Madeira and the 
Paraguay rivers totaling 5,200 square kilometers, the equivalent 
of US$10 million, and the use of a railroad to be constructed around 
the rapids of the Madeira in Brazilian territory. In 1904 Bolivia 
finally concluded a peace treaty with Chile under which it officially 
ceded Bolivia's former territory on the coast in return for indem- 
nification of US$8.5 million, less the value of the Bolivian section 
of a new railroad that Chile would construct from La Paz to the 
Pacific Coast at Arica. The payment was used to expand the trans- 
portation system in Bolivia. By 1920 most major Bolivian cities 
were connected by rail. 

Liberal governments also changed the seat of government and 
the nature of church-state relations. The presidency and Congress 
were moved to La Paz, which became the de facto capital, but the 
Supreme Court of Justice remained in Sucre. Liberal presidents 
canceled the special privileges officially granted to the Roman 
Catholic Church. In 1905 they legalized public worship by other 
faiths, and in 1911 they made civil marriage a requirement. 

Perhaps the most significant development of the Liberal era was 
the dramatic rise of Bolivian tin production. Since the colonial 
period, tin had been mined in the Potosi region; nonetheless, Bolivia 
historically lacked the transportation system necessary to ship large 
quantities of tin to European markets. The extension of the rail 
link to Oruro in the 1890s, however, made tin mining a highly 
profitable business. The decline in European tin production also 
contributed to the Bolivian tin boom at the beginning of the twen- 
tieth century. With the development of huge mines in southern 
Oruro and northern Potosi, La Paz eclipsed Potosi as the mining 
industry's financial and service center. 

Tin production in Bolivia came to be concentrated in the hands 
of Bolivian nationals, although the regimes encouraged foreign in- 
vestment. At first, foreign interests and Bolivians with foreign as- 
sociations took the major share. This changed, however, when 



26 



Historical Setting 



Bolivian tin-mining entrepreneurs realized that smelters in com- 
peting countries depended on Bolivian tin. Simon Patino was the 
most successful of these tin magnates. Of poor mestizo background, 
he started as a mining apprentice. By 1924 he owned 50 percent 
of the national production and controlled the European refining 
of Bolivian tin. Although Patino lived permanently abroad by the 
early 1920s, the two other leading tin-mining entrepreneurs, Carlos 
Aramayo and Mauricio Hochschild, resided primarily in Bolivia. 

Because taxes and fees from tin production were critically im- 
portant to national revenues, Patino, Aramayo, and Hochschild 
exercised considerable influence over government policy. Unlike 
the silver-mining entrepreneurs of the Conservative period, the tin- 
mining magnates did not directly intervene in politics but employed 
politicians and lawyers — known as the rosea (see Glossary) — to 
represent their interests. 

The tin boom also contributed to increased social tensions. Indian 
peasants, who provided most of the labor for the mines, moved 
from their rural communities to the rapidly growing mining towns, 
where they lived and worked in precarious situations. Bolivia's First 
National Congress of Workers met in La Paz in 1912, and in the 
following years the mining centers witnessed an increasing num- 
ber of strikes. 

Liberal governments at first did not face any serious opposition 
because the Conservative Party remained weak after its overthrow 
in 1899. By 1914, however, opposition to political abuses and the 
loss of national territory led to the formation of the Republican 
Party (Partido Republicano). Republican support increased when 
mineral exports declined because of the crisis in international trade 
before World War I, and agricultural production decreased because 
of severe droughts. In 1917 the Republicans were defeated at the 
polls when Jose Gutierrez Guerra (1917-20), the last Liberal presi- 
dent, was elected. But the long rule of the Liberals, one of the most 
stable periods in Bolivian history, ended when the Republicans 
seized the presidency in a bloodless coup in 1920. 

The Republican Party and the Great Depression 

The advent of the Republican Party did not at first indicate any 
profound change in Bolivian politics. Fernando Diez de Medina, 
a Bolivian writer, commented on the change: "Twenty years of 
privilege for one group ends, and ten years of privilege for another 
begins." The 1920s, however, was also a period of political change. 
New parties emerged as the Republican Party split into several fac- 
tions. One major opposing branch was led by Bautista Saavedra 
Mallea, who had the support of the urban middle class, and the 



27 



Bolivia: A Country Study 

other was led by the more conservative Daniel Salamanca Urey 
(1931-34). A number of minor political parties influenced by so- 
cialist or Marxist thought also emerged. 

During Republican rule, the Bolivian economy underwent a pro- 
found change. Tin prices started to decline in the 1920s. After peak- 
ing in 1929, tin production declined dramatically as the Great 
Depression nearly destroyed the international tin market. This 
decline was also caused by the decrease in the tin content of ore 
and the end of new investment in the mines in Bolivia. As eco- 
nomic growth slowed, Republican presidents relied on foreign loans. 
Saavedra (1920-25) and Hernando Siles Reyes (1926-30) borrowed 
heavily in the United States to finance major development projects, 
despite opposition by Bolivian nationalists to the favorable terms 
for the lender. The so-called Nicolaus loan aroused national in- 
dignation because it gave the United States control over Bolivia's 
tax collections in return for a private banking loan of US$33 million. 

During the 1920s, Bolivia faced growing social turmoil. Labor 
unrest, such as the miners' strike in Uncia in 1923, was brutally 
suppressed. But the unrest reached new heights of violence after 
the drastic reduction of the work force during the Great Depres- 
sion. Indian peasants continued to rebel in the countryside, although 
they had been disarmed and their leaders had been executed after 
participating in the overthrow of the Conservative Party in 1899. 
Now, for the first time, the Indians found support for their cause 
among the elite. Gustavo Navarro, who took the name Tristan 
Marof, was Bolivia's most important Indianist. He saw in the Inca 
past the first successful socialism and the model to solve rural 
problems. As Indian uprisings continued during Liberal rule, Siles 
Reyes promised to improve their situation and organized the Na- 
tional Crusade in Favor of Indians. 

The social legislation of the Republican governments was weak, 
however, because neither Saavedra nor Siles Reyes wanted to 
challenge the rosea. Siles Reyes's four years of inconsistent rule and 
unfulfilled promises of radical changes frustrated workers and 
students. In 1930 he was overthrown when he tried to bypass the 
constitutional provision forbidding reelection by resigning in order 
to run again. A military junta ruled until March 1931, when 
Salamanca (1931-34) was elected as a coalition candidate. 

Although he was an esteemed economist before taking office, 
Salamanca was unable to suppress social unrest and to solve the 
severe economic problems caused by the Great Depression. Criti- 
cism of his administration mounted in all sectors of Bolivian soci- 
ety. Initially reluctant to enter into an armed conflict with Paraguay, 



28 



Historical Setting 



he nevertheless led Bolivia into war, a move supported by the mili- 
tary and traditional groups. 

The Chaco War 

The origin of the war was a border dispute between Bolivia and 
Paraguay over the Chaco. This vast area was largely undeveloped 
except for some minor oil discoveries by Standard Oil in Bolivia 
and Royal Dutch Shell in Paraguay. The Chaco, which Bolivia 
traditionally regarded as a province (Gran Chaco), became more 
significant to Bolivia after the latter lost its Pacific Ocean outlet 
to Chile. Bolivia hoped to gain access to the Atlantic Ocean with 
an oil pipeline across the Chaco to the Paraguay River. Despite 
mediation attempts by various countries, the increased number of 
border incidents led the military high commands of Bolivia and 
Paraguay to believe in the inevitability of war. 

Salamanca used one of the border incidents to break diplomatic 
relations with Paraguay and increase Bolivia's military budget, even 
though the country had severe economic problems. Convinced that 
Bolivia's better-equipped, German- trained troops, which outnum- 
bered the Paraguayan army, could win the war, Salamanca went 
to war in 1932. 

The war raged for the next three years. The Bolivians were 
defeated in all major battles, and by the end of 1934 they had been 
driven back 482 kilometers from their original positions deep in 
the Chaco to the foothills of the Andes. Serious strategic errors, 
poor intelligence, and logistical problems in reaching the distant 
battle lines contributed to the losses. In addition, the morale of 
the Bolivian troops was low, and the highland Indians could not 
adapt to the extreme climate in the low-lying Chaco. Despite the 
high command's decision to end the war, Salamanca was deter- 
mined to continue at all costs. In 1934, when he traveled to the 
Chaco to take command of the war, Salamanca was arrested by 
the high command and forced to resign. His vice president, Jose 
Luis Tejada Sorzano, who was known to favor peace, was accepted 
as president (1934-36). 

Salamanca's overthrow was a turning point in the Chaco War. 
The Paraguayan troops were stopped by new, more capable 
Bolivian officers, who fought closer to Bolivian supply lines. On 
June 14, 1935, a commission of neutral nations (Argentina, Brazil, 
Chile, Colombia, Peru, and the United States) declared an ar- 
mistice; a definite settlement was finally reached in 1938. Bolivia 
lost the Chaco but retained the petroleum fields, which Paraguay 
had failed to reach. Both countries suffered heavy losses in the war. 



29 



Bolivia: A Country Study 

In Bolivia alone, an estimated 65,000 people were killed and 
35,000 wounded or captured out of a population of just under 3 
million. 

The humiliating disaster of the Chaco War had a profound im- 
pact in Bolivia, where it was seen as dividing the history of the 
twentieth century "like a knife." The traditional oligarchy was dis- 
credited because of its inept civilian and military leadership in the 
war. Unable to deal with growing criticism, its members blamed 
the loss of the war on the low potential of the Bolivians and saw 
the earlier pessimistic assessment in Arguedas's famous novel Pueblo 
Enfermo (A Sick People) confirmed. 

After the war, a group of middle-class professionals, writers, and 
young officers questioned the traditional leadership. This group, 
which came to be known as the "Chaco Generation," searched 
for new ways to deal with the nation's problems. It resented the 
service of the rosea on behalf of the tin-mining entrepreneurs and 
criticized Standard Oil, which had delivered oil to Paraguay clan- 
destinely through Argentine intermediaries during the war. The 
Chaco Generation was convinced of the need for social change. 
Gustavo Navarro, now more radical than during the 1920s, raised 
the famous slogan "land to the Indians, mines to the state." The 
military, which came to power in 1936, tried to bring about change 
with popular support. 

Prelude to Revolution, 1935-52 
Radical Military Government 

On May 17, 1936, Colonel David Toro Ruilova (1936-37) over- 
threw Tejada in a military coup. Because the officer corps wanted 
to avoid a civilian investigation of the military's wartime leader- 
ship, military backing for the coup came from all ranks. The main 
backers, however, were a group of younger officers who wanted 
to bring profound change to Bolivia. Toro, the leader of this group, 
hoped to reform the country from the top down. His program of 
"military socialism" included social and economic justice and 
government control over natural resources. He also planned to set 
up a corporate- style political system to replace the democratic sys- 
tem established in 1825. 

Toro attempted to get civilian support with far-reaching social 
legislation and nominated a print worker as the first labor secre- 
tary in Bolivia. He also nationalized the holdings of Standard Oil 
without compensation and called for the convening of a constitu- 
tional congress that would include the traditional parties, as well 
as new reformist groups and the labor movement. 



30 



Historical Setting 



Toro was unable, however, to enlist lasting popular support. A 
group of more radical officers resented his reluctance to challenge 
the rosea, and they supported a coup by Colonel German Busch 
Becerra (1937-39) in 1937. A new constitution, promulgated in 
1938, stressed the primacy of the common good over private 
property and favored government intervention in social and eco- 
nomic relations. It also legally recognized the Indian communi- 
ties and included a labor code. In 1939 Busch challenged the 
interests of the mine owners for the first time by issuing a decree 
that would prevent the mining companies from removing capital 
from the country. None of his policies, however, resulted in sig- 
nificant popular and military support, and they completely alienated 
the conservative forces. Frustrated by his inability to bring about 
change, Busch committed suicide in 1939. 

Despite the weakness of the Toro and Busch regimes, their poli- 
cies had a profound impact on Bolivia. Reformist decrees raised 
expectations among the middle class, but when they failed to be 
implemented, they contributed to the growth of the left. The con- 
stitutional convention gave the new forces for the first time a 
nationwide platform and the possibility of forming alliances. The 
military socialist regimes also prompted the conservatives to join 
forces to stem the growth of the left. 

The Rise of New Political Groups 

After a few months under the provisional presidency of General 
Carlos Quintanilla Quiroga (1939-40), the chief of staff during the 
Busch regime, the government changed hands again. General 
Enrique Peharanda Castillo (1940-43) was elected president in the 
spring of 1940. Pefiaranda's support came from the traditional par- 
ties, the Liberals, and the two wings of the Republicans, who had 
formed a concordancia to stem the growth of the movement toward 
reform. 

The trend toward reform, however, could not be halted, and 
a number of new groups gained control of Congress during 
Pefiaranda's presidency. These groups, although very different in 
their ideological outlooks, agreed on the need to change the status 
quo. They included the Trotskyite Revolutionary Workers Party 
(Partido Obrero Revolucionario — POR), which had already been 
formed in 1934, as well as the Bolivian Socialist Falange (Falange 
Socialista Boliviana — FSB), founded in 1937 and patterned on the 
Spanish model. The Leftist Revolutionary Party (Partido de 
Izquierda Revolucionaria — PIR) was founded in 1940 by a coali- 
tion of radical Marxist groups. 



31 



Bolivia: A Country Study 

The most important opposition to the concordancia came from the 
Nationalist Revolutionary Movement (Movimiento Nacionalista 
Revolucionario — MNR). The first party with widespread support 
in Bolivian history, the MNR had a membership that included in- 
tellectuals and both white-collar and blue-collar workers. It was 
founded in 1941 by a small group of intellectual dissidents from 
the middle and upper classes and represented persons from a wide 
range of political persuasions who were united by their discontent 
with the status quo. Among its leaders were Victor Paz Estens- 
soro, a professor of economics; Hernan Siles Zuazo, the son of 
former President Siles Reyes; and several influential writers. The 
party's program included nationalization of all of Bolivia's natural 
resources and far-reaching social reforms. Its anti-Semitic state- 
ments resulted not only in the imprisonment of MNR leaders but 
also in charges by the United States government that MNR was 
under the influence of Nazi fascism. 

As the leader of the congressional opposition, the MNR 
denounced Penaranda's close cooperation with the United States 
and was especially critical of his agreement to compensate Stan- 
dard Oil for its nationalized holdings. The MNR members of Con- 
gress also began an investigation of the massacre of striking miners 
and their families by government troops at one of the Patino mines 
in Catavi in 1942. MNR influence with the miners increased when 
Paz Estenssoro led the congressional interrogation of government 
ministers. 

The MNR had contacts with reformist military officers, who were 
organized in a secret military lodge named the Fatherland's Cause 
(Razon de Patria — Radepa). Radepa was founded in 1934 by 
Bolivian prisoners of war in Paraguay. It sought mass support, 
backed military intervention in politics, and hoped to prevent 
excessive foreign control over Bolivia's natural resources. 

In December 1943, the Radepa-MNR alliance overthrew the 
Penaranda regime. Major Gualberto Villarroel Lopez (1943- 
46) became president, and three MNR members, including Paz 
Estenssoro, joined his cabinet. The MNR ministers resigned, 
however, when the United States refused recognition, repeating 
its charge of ties between the MNR and Nazi Germany. The 
ministers returned to their posts in 1944, after the party had won 
a majority in the election and the United States had recognized 
the government. Villarroel 's government emphasized continuity 
with the reformist regimes of Toro and Busch. Paz Estenssoro, who 
served as minister of finance, hoped to get popular support with 
a budget that emphasized social spending over economic develop- 
ment. But the salary increase for miners did not bring about their 



32 



Victor Paz Estenssoro 
Courtesy Embassy of Bolivia, 
Washington 




consistent backing of the government and only managed to 
strengthen the ties between the MNR and miners. The Villarroel 
government also tried for the first time to get the support of the 
campesinos. In 1945 it created the National Indigenous Congress 
to discuss the problems in the countryside and to improve the sit- 
uation of the peasants. However, most of the social legislation, such 
as the abolition of the labor obligation of the campesinos to their 
landlords, was never put in effect. 

Villarroel was overthrown in 1946. He had been unable to or- 
ganize popular support and faced opposition from conservative 
groups and increasing political terrorism that included murders of 
the government's opponents. Rivalry between the MNR and the 
military in the governing coalition also contributed to his down- 
fall. In 1946 mobs of students, teachers, and workers seized arms 
from the arsenal and moved to the presidential palace. They cap- 
tured and shot Villarroel and suspended his body from a lamppost 
in the main square, while the army remained aloof in the barracks. 

The "Sexenio," 1946-52 

The six years preceding the 1952 Revolution are known as the 
sexenio. During this period, members of the Conservative Party tried 
to stem the growth of the left, but they ultimately failed because 
they could not halt the economic decline and control the growing 
social unrest. Enrique Hertzog Garaizabal (1947-49), who was 



33 



Bolivia: A Country Study 

elected president in 1947 after the interim rule of a provisional junta, 
formed a coalition cabinet that included not only the concordancia 
but also the PIR. He hoped to retain the backing of the Conserva- 
tive Party forces by not increasing taxes, but he tried also to gain 
labor support, relying on the PIR to mobilize the workers. 

The labor sector did not cooperate with the government, 
however, and the PIR became discredited because of its alliance 
with the conservative forces. In 1946 the workers endorsed the The- 
sis of Pulacayo, in which the miners called for permanent revolu- 
tion and violent armed struggle for the working class. As the labor 
sector became more radical, the government resorted more and 
more to oppression, and confrontations increased. The dismissal 
of 7,000 miners and the brutal suppression of yet another uprising 
in Catavi in 1949 made any cooperation between the government 
and the workers impossible. 

The MNR emerged as the dominant opposition group. Although 
most of its leaders, including Paz Estenssoro, were in exile in Argen- 
tina, the party continued to be represented in the Chamber of 
Deputies and the Senate. During the sexenio, the party, despite its 
predominantly middle-class background, repeatedly took the side 
of the workers and adopted their ideology. The MNR also came 
to support the defense of Indian rights, as violence in the country- 
side increased when the promises given at the National Indigenous 
Congress were not fulfilled. 

The MNR's attempts to gain power during the sexenio were un- 
successful. Its 1949 coup attempt failed, although with the support 
of the workers and some military officers it succeeded in gaining 
control of most major cities except La Paz. The MNR's attempt 
to gain power by legal means in 1951 also failed. In the presiden- 
tial election of May 1951, the MNR's Paz Estenssoro, who re- 
mained in exile in Argentina, ran for president and Siles Zuazo 
ran for vice president, both on a platform of nationalization and 
land reform. With the support of the POR and the newly formed 
Bolivian Communist Party (Partido Comunista Boliviano — PCB), 
the MNR won with a clear plurality. The outgoing president, 
however, persuaded the military to step in and prevent the MNR 
from taking power. Mamerto Urriolagoitia Harriague (1949-51), 
who had succeeded the ailing Hertzog in 1949, backed a military 
junta under General Hugo Ballivian Rojas (1951-52). Under 
Ballivian, the government made a last futile attempt to suppress 
the growing unrest throughout the country. 

By 1952 the Bolivian economy had deteriorated even further. 
The governments of the sexenio had been reluctant to increase taxes 
for the upper class and to reduce social spending, resulting in high 



34 



Historical Setting 



inflation. The tin industry had stagnated since the Great Depres- 
sion, despite short revivals during World War II. Ore content had 
declined, and the richer veins were depleted, increasing tin produc- 
tion costs; at the same time, tin prices on the international market 
fell. A disagreement with the United States over tin prices halted 
exports temporarily and caused a decline in income that further 
hurt the economy. The agricultural sector lacked capital, and food 
imports had increased, reaching 19 percent of total imports in 1950. 
Land was unequally distributed — 92 percent of the cultivable land 
was held by estates of 1,000 hectares or more. 

The social unrest that resulted from this economic decline in- 
creased during the last weeks before the 1952 Revolution, when 
a hunger march through La Paz attracted most sectors of society. 
The military was severely demoralized, and the high command 
called unsuccessfully for unity in the armed forces; many officers 
assigned themselves abroad, charged each other with coup attempts, 
or deserted. 

By the beginning of 1952, the MNR again tried to gain power 
by force, plotting with General Antonio Seleme, the junta mem- 
ber in control of internal administration and the National Police 
(Policia Nacional). On April 9, the MNR launched the rebellion 
in La Paz by seizing arsenals and distributing arms to civilians. 
Armed miners marched on La Paz and blocked troops on their way 
to reinforce the city. After three days of fighting, the desertion of 
Seleme, and the loss of 600 lives, the army completely surrendered; 
Paz Estenssoro assumed the presidency on April 16, 1952. 

The Bolivian National Revolution, 1952-64 

Radical Reforms 

The "reluctant revolutionaries," as the leaders of the multiclass 
MNR were called by some, looked more to Mexico than to the 
Soviet Union for a model. But during the first year of Paz Estens- 
soro 's presidency, the radical faction in the party, which had gained 
strength during the sexenio when the party embraced the workers 
and their ideology, forced the MNR leaders to act quickly. In July 
1952, the government established universal suffrage, with neither 
literacy nor property requirements. In the first postrevolutionary 
elections in 1956, the population of eligible voters increased from 
approximately 200,000 to nearly 1 million voters. The government 
also moved quickly to control the armed forces, purging many 
officers associated with past Conservative Party regimes and drasti- 
cally reducing the forces' size and budget. The government also 
closed the Military Academy (Colegio Militar) and required that 
officers take an oath to the MNR. 



35 



Bolivia: A Country Study 

The government then began the process of nationalizing all mines 
of the three great tin companies. First, it made the export and sale 
of all minerals a state monopoly to be administered by the state- 
owned Mining Bank of Bolivia (Banco Minero de Bolivia — Bamin). 
Then it set up the Mining Corporation of Bolivia (Corporacion 
Minera de Bolivia — Comibol) as a semiautonomous enterprise to 
run state-owned mines. On October 31, 1952, the government na- 
tionalized the three big tin companies, leaving the medium-sized 
mines untouched, and promising compensation. In this process, 
two- thirds of Bolivia's mining industry was turned over to Comibol. 

A far-reaching agrarian reform was the final important step taken 
by the revolutionary government. In January 1953, the govern- 
ment established the Agrarian Reform Commission, using advisers 
from Mexico, and decreed the Agrarian Reform Law the follow- 
ing August. The law abolished forced labor and established a pro- 
gram of expropriation and distribution of the rural property of the 
traditional landlords to the Indian peasants. Only estates with low 
productivity were completely distributed. More productive small 
and medium-sized farms were allowed to keep part of their land 
and were encouraged to invest new capital to increase agricultural 
production. The Agrarian Reform Law also provided for compen- 
sation for landlords to be paid in the form of twenty-five-year 
government bonds. The amount of compensation was based on 
the value of the property declared for taxes. 

During the first years of the revolution, miners wielded extra- 
ordinary influence within the government. In part, this influence 
was based on the miners' decisive role in the fighting of April 1952. 
In addition, however, armed militias of miners formed by the 
government to counterbalance the military had become a power- 
ful force in their own right. Miners immediately organized the 
Bolivian Labor Federation (Central Obrera Boliviana — COB), 
which demanded radical change as well as participation in the 
government and benefits for its members. As a result, the govern- 
ment included three pro-COB ministers in the cabinet and accepted 
the demand for fuero sindical, the legally autonomous status that 
granted the COB semisovereign control over the workers of Bolivia. 
The MNR regime gave worker representatives veto power in all 
Comibol decisions and allowed for a cogovernment in mine ad- 
ministration. The government also established special stores for 
the miners, increased their salaries, and rehired fired workers. 

The peasants also exerted a powerful influence. At first, the 
government was unable to control the occupation of land by the 
peasants. As a result, it could not enforce the provisions of the land 
reform decree to keep medium- sized productive estates intact. But 



36 



Historical Setting 



the MNR eventually gained the support of the campesinos when 
the Ministry of Peasant Affairs was created and when peasants were 
organized into syndicates. Peasants were not only granted land but 
their militias also were given large supplies of arms. The peasants 
remained a powerful political force in Bolivia during all subsequent 
governments. 

The Unfinished Revolution 

Although these major steps were never reversed, observers have 
regarded the revolution as unfinished because it lost momentum 
after the first years. The divisions within the MNR seriously 
weakened its attempt to incorporate the support of the Indian 
peasants, the workers, and the middle class for the government. 
In 1952 the MNR was a broad coalition of groups with different 
interests. Juan Oquendo Lechm led the left wing of the party and 
had the support of the labor sector. Siles Zuazo represented the 
right wing and had the backing of the middle class. Paz Estens- 
soro was initially the neutral leader. Because the majority of the 
MNR elite wanted a moderate course and the left wing demanded 
radical change, the polarization increased and led eventually to the 
destruction of the MNR in 1964. 

The country faced severe economic problems as a result of the 
changes enacted by the government. The nationalization of the 
mines had a negative effect on the economy. The mines of Comibol 
produced at a loss because of the lack of technical expertise and 
capital to modernize the aging plants and nearly depleted deposits 
of low-grade ore. Declining tin prices on the world market con- 
tributed to the economic problems in the mining sector. Neverthe- 
less, workers in the management of Comibol increased salaries and 
the work force by nearly 50 percent. 

The decline of agricultural production contributed to the rapidly 
deteriorating economy during the first years of the revolution. 
Although anarchy in the countryside was the main reason for the 
decrease in production, the peasants' inability to produce for a mar- 
ket economy and the lack of transport facilities contributed to the 
problem. The attempt to increase agricultural production by 
colonizing the less densely populated valleys was not successful at 
first. As a result, the food supply for the urban population decreased, 
and Bolivia had to import food. 

High inflation, primarily caused by social spending, also hurt 
the economy. The value of the peso, Bolivia's former currency, 
fell from 60 to 12,000 to the United States dollar between 1952 
and 1956, affecting primarily the urban middle class, which began 
to support the opposition. 



37 



Bolivia: A Country Study 



The bankrupt economy increased the factionalism within the 
MNR. Whereas the left wing demanded more government con- 
trol over the economy, the right wing hoped to solve the nation's 
problems with aid from the United States. The government had 
sought cooperation with the United States as early as 1953, a move 
that had given the United States influence over Bolivia's economy. 
Because of United States pressure, the Bolivian government prom- 
ised to compensate the owners of nationalized tin mines and drew 
up a new petroleum code, which again allowed United States in- 
vestments in Bolivian oil. 

During the presidency of Siles Zuazo (1956-60 and 1982-85), 
who won the election with 84 percent of the vote, United States 
aid reached its highest level. In 1957 the United States subsidized 
more than 30 percent of the Bolivian government's central budget. 
Advised by the United States government and the IMF, the Siles 
Zuazo regime then in power reduced inflation with a number of 
politically dangerous measures, such as the freezing of wages and 
the ending of the government- subsidized miners' stores. 

Siles Zuazo 's stabilization plan seriously damaged the coalition 
between the MNR and the COB. The COB called immediately 
for a general strike, which threatened to destroy an already dis- 
rupted economy; the strike was called off only after impassioned 
appeals by the president. But the conflict between the government 
and the miners' militias continued as the militias constantly 
challenged the government's authority. Siles Zuazo faced not only 
labor unrest in the mines but also discontent in the countryside, 
where peasant leaders were competing for power. In an effort to 
quell the unrest, he decided to rebuild the armed forces. 

During the Siles Zuazo administration, the strength of the armed 
forces grew as a result of a new concern for professionalism and 
training, technical assistance from the United States, and an in- 
crease in the size and budget of the military. In addition, the mili- 
tary's role in containing unrest gave it increasing influence within 
the MNR government. 

Although the stabilization plan and the strengthening of the 
armed forces were resented by Lechin's faction of the party, the 
first formal dissent came from Walter Guevara Arze and the MNR 
right wing. Guevara Arze, who had been foreign minister and then 
minister of government in the first Paz Estenssoro government, 
split from the MNR to form the Authentic Nationalist Revolu- 
tionary Movement (Movimiento Nacionalista Revolucionario 
Autentico — MNRA) in 1960, when his presidential hopes were de- 
stroyed by Paz Estenssoro 's candidacy. Guevara Arze charged that 



38 



Historical Setting 



the MNR had betrayed the revolution, and he posed a formidable 
opposition in the presidential election of 1960. 

Conflicts within the MNR increased during Paz Estenssoro's 
second term (1960-64). Together with the United States and the 
Federal Republic of Germany (West Germany), Paz Estenssoro 
endorsed the "Triangular Plan," which called for a restructuring 
of the tin-mining industry. The plan demanded the end of the work- 
ers' control over Comibol operations, the firing of workers, and 
a reduction in their salaries and benefits; it was strongly opposed 
by the COB and Lechin's MNR faction. 

In 1964 Paz Estenssoro decided to run again for president, using 
a revision of the 1961 constitution that would allow for a consecu- 
tive term, and he forced his nomination at a party convention. 
Lechin, who had hoped to become the presidential candidate, broke 
away to form the National Leftist Revolutionary Party (Partido 
Revolucionario de la Izquierda Nacional — PRIN). With his sup- 
port in the MNR dwindling and opposition from the labor sector 
mounting, Paz Estenssoro accepted General Rene Barrientos 
Ortuno as vice presidential candidate. Because most opposition 
groups abstained, Paz Estenssoro was reelected with the support 
of the military and the peasants. Paz Estenssoro had come to rely 
increasingly on the military, whose role as a peacekeeper had made 
it an arbiter in politics. But this support was to prove unreliable; 
the military was already planning to overthrow him. Moreover, 
rivalry among peasant groups often resulted in bloody feuds that 
further weakened the Paz Estenssoro government. 

During its twelve-year rule, the MNR had failed to build a firm 
basis for democratic, civilian government. Increasing factionalism, 
open dissent, ideological differences, policy errors, and corruption 
weakened the party and made it impossible to establish an institu- 
tional framework for the reforms. Not even the peasants, who were 
the main beneficiaries of the revolution, consistently supported the 
MNR. 

Military Rule, 1964-82 

The Presidency of Barrientos 

On November 4, 1964, Barrientos (president, 1964-65; copresi- 
dent, May 1965-January 1966; and president, 1966-69) and 
General Alfredo Ovando Candia occupied the presidential palace 
and declared themselves copresidents. But as the crowd, which had 
gathered outside the palace, persisted in shouting its preference 
for the more charismatic Barrientos, Ovando allowed Barrientos 
to assume the presidency alone, while he occupied the post of com- 
mander in chief of the armed forces. 



39 



Bolivia: A Country Study 

Barrientos insisted that his assumption of power was not a 
counterrevolutionary move and promised to restore the revolution 
to its "true path," from which the MNR had deviated during its 
twelve-year rule. Nevertheless, his government continued many 
of the policies of the second Paz Estenssoro administration, includ- 
ing the IMF stabilization plan and the Triangular Plan. The em- 
phasis on reducing social costs remained in effect. In May 1965, 
the army forced Barrientos to accept Ovando as his copresident 
as a sort of reward for suppressing an uprising by miners and fac- 
tory workers. 

The economy improved during the Barrientos regime at a growth 
rate averaging 6.5 percent per year. The rise of tin prices resulted 
in the first profit for Comibol in 1966 and contributed to increased 
production in the medium-sized mines that had remained in pri- 
vate hands. Barrientos encouraged the private sector and foreign 
investment and gave Gulf Oil Company permission to export 
petroleum and natural gas from Bolivia. 

In 1966 Barrientos legitimized his rule by winning the presidential 
election. He formed the Popular Christian Movement (Movimiento 
Popular Cristiano — MPC) as his base of support. Although the 
MPC was not very successful, he won the election with a coalition 
of conservative politicians, the business community, and the 
peasants. 

Barrientos' s efforts to build support in the countryside succeeded 
at first with the signing in February 1964 of the Military-Peasant 
Pact (Pacto Militar-Campesino). Under the agreement, the cam- 
pesino militias agreed to adopt an antileftist stance and to sub- 
ordinate themselves to the army. But his attempt to impose taxes 
on peasants resulted in a violent response and loss of support in 
rural areas. 

Determined to keep the labor sector under control, Barrientos 
took away most of the gains it had achieved during the MNR's 
rule. He placed Comibol under the control of a military director 
and abolished the veto power of union leaders in management 
decisions. The president also cut the pay of the miners to the equiva- 
lent of US$0.80 a day and reduced the mining work force and the 
enormous Comibol bureaucracy by 10 percent. Finally, he de- 
stroyed the COB and the mine workers' union, suppressed all strike 
activity, disarmed the miners' militias, and exiled union leaders. 
Military troops again occupied the mines, and in 1967 they mas- 
sacred miners and their families at the Catavi-Siglo XX mines. 

But Barrientos could not completely silence the labor sector; 
miners led the growing opposition to his rule. The various groups 
opposing his rule joined in denouncing Barrientos 's selling of natural 



40 



Historical Setting 



resources to the United States under favorable terms. They resented 
his invitation to United States private investment in Bolivia be- 
cause he offered greater privileges to foreign investors. The defec- 
tion of Barrientos's close friend and minister of interior, Colonel 
Antonio Arguedas, to Cuba after his announcement that he had 
been an agent for the United States Central Intelligence Agency 
(CIA) aroused national indignation. The military also resented the 
key role of United States officers in the capture and killing of Ernesto 
"Che" Guevara in 1967 in Bolivia, where he had tried to start 
a guerrilla movement (see The Counterinsurgency Decade, ch. 5). 

The death of Barrientos in a helicopter crash on April 27, 1969, 
initially left control in the hands of his vice president, Luis Adolfo 
Siles Salinas (1969). Real power, however, remained with the armed 
forces under its commander in chief, General Ovando, who took 
power on September 26, 1969, in a coup that was supported by 
reformist officers. 

Revolutionary Nationalism: Ovando and Torres 

Ovando (copresident, May 1965-January 1966, and president, 
January- August 1966 and 1969-70) annulled the elections sched- 
uled for 1970, dismissed the Congress, and appointed a cabinet 
that included independent reformist civilians who had opposed the 
policies of Barrientos. Ovando hoped to gain civilian and military 
support with a program of "revolutionary nationalism, ' ' which he 
had outiined in the "Revolutionary Mandate of the Armed Forces. ' ' 
Revolutionary nationalism reflected the heritage and rhetoric of 
the military reformist regimes of the past, as well as the spirit of 
the 1952 Revolution. It also showed the influence of the Peruvian 
government of General Juan Velasco Alvarado. Many Bolivian 
officers believed that the military had to intervene in politics to 
lead the country toward reform because civilian governments had 
failed in that undertaking. They were convinced that it was in the 
main interest of the armed forces to end underdevelopment, which 
they saw as the cause of insurgency. The military would therefore 
fight on the internal frontiers against social injustice and economic 
dependence. 

Despite highly popular measures, such as the nationalization of 
the holdings of the North American-owned Gulf Oil Company, 
Ovando failed to gain popular support. Popular enthusiasm over 
the nationalization was short lived. Disagreement over compensa- 
tion, a boycott of Bolivian crude oil on the international market, 
and a general downturn in the economy became divisive factors. 
Even though Ovando legalized the COB and withdrew troops from 
the mining camps, lasting worker support for the regime was not 



41 



Bolivia: A Country Study 

ensured. Frustrated expectations, broken promises, and the mas- 
sacre of miners by the military in Catavi in 1967 had radicalized 
the workers, who now refused to cooperate with the military 
government. 

While the left became radicalized, the right became weary of 
Ovando's vacillating statements, which included the suggestion that 
private property be abolished. Even when Ovando moved right 
during the last months of his regime, he was unable to enlist the 
support of the conservative groups in the country because this move 
only emphasized his weakness. 

Ovando's reform program also polarized the military. Reform- 
ist officers, concerned about the decline in popular support for the 
military since the Barrientos regime, shifted their support to the 
more radical General Juan Jose Torres Gonzalez (1970-71), whom 
Ovando had dismissed as his commander in chief; the right backed 
General Rogelio Miranda. The chaos surrounding the overthrow 
of Ovando highlighted the division in the armed forces. Military 
officers demanded the resignation of Ovando and Miranda after 
a failed coup attempt by the latter on October 5, 1970. A trium- 
virate, formed on October 6, failed to consolidate support. On Oc- 
tober 7, as the country moved toward civil war after the COB had 
declared a general strike, General Torres emerged as the com- 
promise candidate and became president of Bolivia. 

The main feature of Torres' s presidency was a lack of author- 
ity. Rather than taking the initiative on policies, Torres primarily 
reacted to pressure from different groups. His minister of inter- 
ior, Jorge Gallardo Lozada, labeled the Torres government the "ten 
months of emergency." 

Torres hoped to retain civilian support by moving to the left. 
He nationalized some United States property, such as the waste- 
processing operation of the Catavi tin mines and the Matilde zinc 
mine, and he ordered the Peace Corps, a United States program, 
out of Bolivia. While limiting United States influence in Bolivia, 
Torres increased cooperation with the Soviet Union and its allies 
in the economic and technical sectors. 

Because of his lack of a clear strategy and political experience, 
however, Torres soon succeeded in alienating all sectors of Bolivian 
society. He found it very difficult to organize groups on the left 
because they confronted him with demands that he could not meet, 
such as giving them half of all cabinet seats. The workers, students, 
and parties of the left wanted a socialist state and saw the Torres 
government only as a step in that direction. 

In June 1970, the Torres regime established the Popular Assem- 
bly (Asamblea Popular) in an attempt to form an alternative popular 



42 



Historical Setting 



government. Consisting mainly of representatives of workers' and 
peasants' organizations, the Popular Assembly was intended to serve 
as a base for the radical transformation of society. However, the 
left remained divided by ideological differences and rivalry for 
leadership. They could not agree on controversial issues dealing 
with full worker participation in state and private enterprises, the 
creation of armed militias, and the establishment of popular 
tribunals having legal jurisdiction over crimes against the work- 
ing class. No consensus was achieved, and many delegates, resenting 
the lack of power to enforce the resolutions and running short of 
funds, returned home prematurely. The Popular Assembly did, 
however, succeed in weakening the government by creating a cli- 
mate in which popular organizations acted independently from the 
state. 

Torres 's hope of placating conservative opposition by avoiding 
radical change did not win him the support of the right, especially 
of the powerful business community. Conservative groups unified 
in their opposition because they saw a chance for a political come- 
back in alliance with rightist officers. The military, in turn, be- 
came increasingly polarized because of their discontent with Torres' s 
chaotic leadership. Torres had cut the defense budget to free money 
for education and allowed civilian interference in strictly mili- 
tary matters. He often permitted military disobedience to go un- 
punished. The last step of institutional decay was a manifesto written 
during the last weeks of the Torres regime by a group of junior 
officers who questioned military authority. It resulted in widespread 
military support for the coup on August 21, 1971, by Colonel Hugo 
Banzer Suarez, the former Military Academy commander whom 
Torres had exiled. 

The Banzer Regime 

Colonel Hugo Banzer (1971-78), a highly respected officer who 
had repeatedly attempted to overthrow the Torres regime, ruled 
for six years, the longest continuous presidential term in recent 
Bolivian history. Banzer' s presidency was characterized by rela- 
tive political stability and unprecedented economic growth. At first 
he was supported by the Nationalist Popular Front (Frente Popu- 
lar Nacionalista — FPN), an alliance between the MNR under Paz 
Estenssoro, who was allowed to return from exile in Lima, and 
the FSB under Mario Gutierrez. Both parties had been enemies 
until the chaos of the Torres regime gave them a chance for a po- 
litical comeback in league with conservative elements in the armed 
forces. 



43 



Bolivia: A Country Study 

During the first years of the Banzer presidency, the economy 
improved rapidly (see Growth and Structure of the Economy, 
ch. 3). Exports tripled between 1970 and 1974 because of increased 
production of petroleum, natural gas, and tin, which was then re- 
fined in Bolivian smelters. The production of cotton in the Santa 
Cruz area in eastern Bolivia also tripled between 1970 and 1975. 

Despite this economic growth, Bolivia reverted to the repression 
of earlier regimes. The new minister of interior, Colonel Andres 
Selich, ordered a massive crackdown on the left, abolishing labor 
unions and closing the universities. The government brutally sup- 
pressed a general strike against the devaluation of the Bolivian peso 
in 1972. In 1974 price increases for basic goods and control of food 
prices resulted in roadblocks by peasants in the Cochabamba Val- 
ley and their subsequent massacre by the military. 

The governing alliance disintegrated almost immediately when 
the MNR and the FSB split. They proved an unreliable support 
for Banzer because only small factions remained in the FPN. The 
armed forces were also divided, and various factions tried to over- 
throw the regime. On June 5, 1974, younger officers belonging 
to the Generational Group (Grupo Generacional) and led by Gen- 
eral Gary Prado Salmon attempted a coup, demanding that Banzer 
legitimize his rule. It failed, however, as did another on Novem- 
ber 7 that was supported by military, MNR, and FSB elements 
in Santa Cruz. 

The November 7, 1974, coup has been called an auto-golpe (self- 
made coup) because it gave Banzer a reason to rule without civilian 
interference. Influenced by the Brazilian model, he announced the 
complete reorganization of the Bolivian political system and the 
formation of a "new Bolivia" under military rule. Banzer hoped 
to keep the support of the business community, the mine owners, 
the agricultural entrepreneurs in Santa Cruz, and the growing num- 
ber of loyal bureaucrats. 

The government, however, soon began to face serious problems. 
The "economic miracle" turned out to be a myth, the production 
of petroleum declined sharply, and Comibol produced at a loss, 
despite high mineral prices, because it was subsidizing other state 
agencies. Cotton production also declined when world prices fell. 

The stability of the Banzer regime was superficial because the 
military remained divided by personal rivalry, ideological differ- 
ences, and a generational gap. Growing civilian opposition was 
centered in the labor sector, despite the renewed military occupa- 
tion of the mines. Radical students and the progressive sector of 
the Roman Catholic Church became spokespersons for the op- 
pressed groups; the peasants also criticized the government. 



44 



Historical Setting 



External factions contributed to the weakening of the Banzer re- 
gime as well. The negotiation with Chile for an outlet to the sea 
had raised hopes in 1974. When an agreement between Banzer 
and General Augusto Pinochet Ugarte failed because of the oppo- 
sition of Chilean nationalists, Banzer' s position was weakened. After 
Jimmy Carter assumed the United States presidency in 1976, the 
United States pressured Banzer to hold elections. 

In 1977, with opposition from civilian groups and the military 
mounting and pressure from the United States increasing, Banzer 
announced a presidential election for 1980, hoping to remain in 
control, but labor unrest and hostility to his regime forced him to 
set the date for 1978. However, General Juan Pereda Asbun, 
Banzer's handpicked candidate, carried out a coup in July 1978 
after the National Electoral Court annulled the elections because 
of widespread fraud by Pereda' s supporters. Although Bolivia con- 
tinued under military rule, the 1978 election marked the begin- 
ning of Bolivia's traumatic transition to democracy during the 
following four years. 

The Tumultuous Transition to Democracy, 1978-82 

Between 1978 and 1980, Bolivia was constantly in a state of cri- 
sis. The fragmentation of political forces made it impossible for 
any party to dominate. In the three elections held during this period, 
no party achieved a majority, and alliances of various groups could 
not break the deadlock. Social unrest increased as peasants began 
to agitate again on a large scale for the first time since their rebel- 
lion in the late colonial period. The Bolivian workers were more 
radical than ever, and in 1979, during the COB's first congress 
since 1970, they vehemently protested the economic austerity mea- 
sures dictated by the IMF. 

The division in the armed forces and the increasing visibility of 
paramilitary groups reflected the institutional decay of the mili- 
tary. A civilian investigation into human rights violations committed 
during the Banzer regime further demoralized the officer corps. 

General Pereda did not call for elections, despite his promise to 
do so, and he was overthrown in a bloodless coup in November 
1978 by General David Padilla Arancibia (1978-79), who was sup- 
ported by the younger institutionalist faction of the military. He 
saw the main role of the military as the defense of the country rather 
than political intervention and announced elections for 1979 without 
naming an official government candidate. Electoral reforms sim- 
plified voter registration, and 90 percent of the electorate chose 
among eight presidential candidates in honest elections. 



45 



Bolivia: A Country Study 

When none of the main candidates gained a majority, Congress 
appointed former MNRA head Guevara Arze as interim president 
on August 8, 1979. This first civilian regime since the brief term 
of Siles Salinas in 1969 was overthrown, however, by a bloody coup 
under Colonel Alberto Natusch Busch in November. When Natusch 
stepped down after two weeks because of intense civilian opposi- 
tion and only limited military support, as well as United States 
diplomatic action to prevent recognition of the Natusch govern- 
ment, another interim president was appointed. Lidia Gueiler 
Tejada (1979-80), head of the Chamber of Deputies and a vet- 
eran MNR politician, became the first woman president of Bolivia. 
In 1980 Gueiler presided over elections in which the parties of the 
left gained a clear majority of the vote. Siles Zuazo and his Dem- 
ocratic and Popular Unity (Unidad Democratica y Popular — UDP) 
coalition alone got 38 percent of the votes; Congress was certain 
to name him president on August 6, 1980. 

The process was disrupted on July 17, 1980, however, by the 
ruthless military coup of General Luis Garcia Meza Tejada. Report- 
edly financed by cocaine traffickers and supported by European 
mercenaries recruited by Klaus Barbie, former Gestapo chief in 
Lyons, the coup began one of the darkest periods in Bolivian his- 
tory. Arbitrary arrest by paramilitary units, torture, and disappear- 
ances — with the assistance of Argentine advisers — destroyed the 
opposition. Government involvement in cocaine trafficking resulted 
in international isolation for Bolivia. Cocaine exports reportedly 
totaled US$850 million in the 1980-81 period of the Garcia Meza 
regime, twice the value of official government exports. The "coca 
dollars" were used to buy the silence or active support of military 
officers. But Garcia Meza, who failed to gain support in the mili- 
tary, faced repeated coup attempts and was pressured to resign on 
August 4, 1981. 

The ruthlessness, extreme corruption, and international isola- 
tion of the Garcia Meza government completely demoralized and 
discredited the military; many officers wanted to return to democ- 
racy. However, President General Celso Torrelio Villa (1981-82), 
who had emerged as a compromise candidate of the military after 
Garcia Meza's resignation, was reluctant to call for elections. In 
July 1982, after yet another attempt by the Garcia Meza clique 
to return to power, he was replaced by General Guido Vildoso 
Calderon (1982), who was named by the high command to return 
the country to democratic rule. On September 17, 1982, during 
a general strike that brought the country close to civil war, the mili- 
tary decided to step down, to convene the 1980 Congress, and to 
accept its choice as president. Accordingly, Siles Zuazo assumed 



46 



Historical Setting 



the presidency on October 10, 1982 (see The Tortuous Transition 
to Democracy, ch. 4). 

* * * 

A good survey of Bolivian history is Herbert S. Klein's Bolivia: 
The Evolution of a Multi-Ethnic Society. The impact of the conquest 
on the Indians and their role during colonial rule and in the Repub- 
lic of Bolivia have recently received more attention in two anthol- 
ogies: Resistance, Rebellion, and Consciousness in the Andean Peasant 
World, edited by Steve J. Stern, and Bolivia: La fuerza historica del 
campesinado, edited by Fernando Calderon and Jorge Dandier. 

The early national period is treated in William Lofstrom's The 
Promise and Problem of Reform. Guillermo Lora gives a Bolivian view 
of the role of the workers in A History of the Bolivian Labour Move- 
ment, 1848-1971. A political history of the late nineteenth century 
to the revolution is Herbert S. Klein's monograph Parties and Po- 
litical Change in Bolivia, 1880-1952. 

The 1952 Revolution is treated in James M. Malloy's Bolivia: 
The Uncompleted Revolution and in the anthology edited by James 
M. Malloy and Richard S. Thorn, Beyond the Revolution. Christopher 
Mitchell's monograph The Legacy of Populism in Bolivia offers criti- 
cal evaluation of the MNR. The period after 1964 is treated in Revo- 
lution and Reaction by James M. Malloy and Eduardo A. Gamarra 
and in the anthology Modern Day Bolivia, edited by Jerry R. Ladman. 
(For further information and complete citations, see Bibliography.) 



47 



Chapter 2. The Society and Its Environment 




Symbolism on the back of the Great Idol of Tiwanaku 



BOLIVIAN SOCIETY IN THE LATE 1980s remained frag- 
mented along lines of region, ethnic affiliation, and class. Profound 
differences existed between the Andean area and the eastern 
lowlands. With the exception of the Santa Cruz area in the lowlands, 
the Andes remained the most heavily settled region. The lowlands 
had a distinct culture, ecology, and economic history, reflecting 
in part a long history of isolation from most of national life. The 
1952 Revolution and subsequent far-reaching changes affected the 
lowlands and highlands in strikingly different ways. 

Indians made up more than half of the population in the late 
1980s; mestizos and whites accounted for most of the remainder. 
Each of these groups differed widely in worldview, language, and 
way of life. For most of Bolivia's history, Indians lived in isolated 
rural communities where they remained socially and politically mar- 
ginal. Whites and mestizos controlled the land and commerce and 
dominated the countryside where most Indians lived. A regional- 
ism reinforced by strong geographic barriers further contributed 
to this ethnic diversity. 

Changes beginning in the 1950s broke down much of the tradi- 
tional isolation of Indian communities. Land reform, increased 
educational opportunities, universal suffrage, and improved trans- 
portation brought Indians into greater contact with national soci- 
ety and undermined the hegemony of whites and mestizos. These 
changes also permitted a modicum of social mobility. 

Class loyalties and affiliation reflected ethnic identification. The 
upper class consisted of a white elite that based its sense of privilege 
not merely on wealth but on proper lineage and breeding as well. 
The middle class — a diverse, vaguely defined group including every- 
one from small shopkeepers to prosperous professionals and busi- 
ness owners without the elite family background — was mestizo. It 
arose as a politically self-conscious group during the twentieth- 
century mining boom and joined with wage earners in the 1952 
Revolution to bring about much of the present configuration of 
society. 

The working class, too, was a child of the mining boom. Miners 
and transportation workers formed its nucleus. Following the revo- 
lution, city-bound migrants swelled the ranks of the working class. 
The urban population grew rapidly; by the early 1980s, nearly half 
of all Bolivians lived in cities. Urbanization transformed social re- 
lations as migrants remade the face of the city and the village alike. 



51 



Bolivia: A Country Study 

Despite far-reaching social changes, society remained profoundly 
oriented to kin and family. People of all classes and ethnic groups 
focused their deepest loyalties on their small community or neigh- 
borhood and a close-knit group of relatives. Family and kin offered 
a haven amid the economic uncertainties and political turmoil of 
the 1980s, providing a safety net for poorer Bolivians and a pool 
of trusted allies for those of greater means. Individuals consulted 
with kin on all important decisions, and social life centered mainly 
on family visits. 

Geography 

Landlocked Bolivia sits astride the Andes in the west-central part 
of the South American continent. With an area of 1,098,581 square 
kilometers, the country is about the size of Texas and California 
combined, or twice the size of Spain. Bolivia has 6,083 kilometers 
of land boundaries, which adjoin five countries. The country is 
bounded by Brazil to the north and east, Paraguay to the southeast, 
Argentina to the south, Chile to the southwest, and Peru to the 
northwest (see fig. 1). 

Natural Regions 

Stretching in a broad arc across western Bolivia, the Andes de- 
fine the country's three geographic zones: the mountains and Alti- 
plano in the west, the semitropical Yungas and temperate valleys 
of the eastern mountain slopes, and the tropical lowlands or plains 
(llanos) of the eastern lowlands, or Oriente. The Andes run in two 
great parallel ranges or cordilleras. The western range (Cordillera 
Occidental) runs along the Peruvian and Chilean borders. The 
eastern range (Cordillera Oriental) is a broad and towering sys- 
tem of mountains stretching from Peru to Argentina. Between the 
two ranges lies the Altiplano, a lofty plateau 805 kilometers long 
and 129 kilometers wide (see fig. 4). 

Mountains and Altiplano 

The Cordillera Occidental is a chain of dormant volcanoes and 
solfataras, volcanic vents emitting sulfurous gases. Bolivia's highest 
peak, the snowcapped Sajama (6,550 meters), is located here. The 
entire cordillera is of volcanic origin and an extension of the vol- 
canic region found in southern Peru. Most of the northern part 
of this range has an elevation of about 4,000 meters; the southern 
part is somewhat lower. Rainfall, although scanty everywhere, is 
greater in the northern half, where the land is covered with scrub 
vegetation. The southern area receives almost no precipitation, and 
the landscape consists mostly of barren rocks. All of the Cordillera 



52 



The Society and Its Environment 



Occidental region is sparsely populated, and the south is virtually 
uninhabited. 

The Altiplano, the high plateau between the two cordilleras, com- 
prises four major basins formed by mountainous spurs that jut east- 
ward from the Cordillera Occidental about halfway to the Cordillera 
Oriental. Along the Altiplano 's eastern side is a continuous flat 
area, which has served as Bolivia's principal north-south transpor- 
tation corridor since colonial times. The entire Altiplano was origi- 
nally a deep rift between the cordilleras that gradually filled with 
highly porous sedimentary debris washed down from the peaks. 
This sedimentary origin explains its gradual slope from north to 
south; greater rainfall in the north has washed a larger quantity 
of debris onto the platform floor. 

The most prominent feature of the Altiplano is the large lake 
at its northern end, Lake Titicaca. At 3,810 meters above sea level, 
it is the highest navigable body of water in the world. With a sur- 
face area of 9,064 square kilometers, it is larger than Puerto Rico 
and is South America's largest lake. Lake Titicaca is also deep, 
about 370 meters at its maximum, but with an average depth of 
215 meters; its volume of water is large enough to maintain a con- 
stant temperature of 10°C. The lake actually moderates the cli- 
mate for a considerable distance around it, making crops of corn 
and wheat possible in sheltered areas. 

Lake Titicaca drains southward through the slow-moving, reed- 
filled Desaguadero River to Lake Poopo. In contrast to the fresh- 
water Lake Titicaca, Lake Poopo is salty and shallow, with depths 
seldom more than four meters. Because it is totally dependent on 
seasonal rainfall and the overflow from Lake Titicaca, Lake Poopo 's 
size varies considerably. Several times in the twentieth century, 
it nearly dried up when rainfall was low or the Desaguadero River 
silted. In years of heavy rainfall, however, Lake Poopo has over- 
flowed to the west, filling the Coipasa Saltpan with shallow water. 

Rainfall in the Altiplano decreases toward the south, and the 
scrub vegetation grows more sparse, eventually giving way to barren 
rocks and dry red clay. The land contains several salt flats, the dried 
remnants of ancient lakes. The largest of these is the Uyuni Salt- 
pan, which covers over 9,000 square kilometers. The salt is more 
than five meters deep in the center of this flat. In the dry season, 
the lake bed can be traversed by heavy trucks. Near the Argentine 
border, the floor of the Altiplano rises again, creating hills and vol- 
canoes that span the gap between the eastern and western cordilleras 
of the Andes. 

The much older Cordillera Oriental enters Bolivia on the north 
side of Lake Titicaca, extends southeastward to approximately 17° 



53 




Figure 4. Topography and Drainage 



south latitude, then broadens and stretches south to the Argentine 
border. The northernmost part of the Cordillera Oriental, the 
Cordillera Real, is an impressive snow-capped series of granite 
mountains. Many of these peaks exceed 6,000 meters, and two — 
Illimani (6,322 meters), which overlooks the city of La Paz, and 
Illampu (6,424 meters) — have large glaciers on their upper slopes. 
South of 17° south latitude, the range changes character. Called 
the Cordillera Central here, the land is actually a large block of 
the earth's crust that has been lifted and tilted eastward. The western 
edge of this block rises in a series of steep cliffs from the Altiplano. 
The backbone of the cordillera is a high, rolling plain, with eleva- 
tions from 4,200 to 4,400 meters, interspersed with irregularly 



54 



The Society and Its Environment 



spaced high peaks. Too high to be exploited for large-scale com- 
mercial grazing, this area takes its name from the predominant 
vegetation type, the puna. 

Yungas and Other Valleys 

The northeastern flank of the Cordillera Real is known as the 
Yungas, from the Aymara word meaning "warm valleys." The 
steep, almost inaccessible slopes and peaks of this mainly semi- 
tropical valley area northeast of La Paz offer some of the most spec- 
tacular scenery in Bolivia. Rainfall is heavy, and lush vegetation 
clings to the sides of narrow river valleys. The land is among the 
most fertile in Bolivia, but poor transportation has hindered its 
agricultural development. The government attempted to build a 
railroad through the Yungas in 1917 to connect La Paz with the 
eastern lowlands. The railroad was abandoned, however, after com- 
pletion of only 150 kilometers. 

The eastern slopes of the Cordillera Central descend gradually 
in a series of complex north- south ranges and hills. Rivers, drain- 
ing to the east, have cut long narrow valleys; these valleys and the 
basins between the ranges are favorable areas for crops and settle- 
ment. Rich alluvial soils fill the low areas, but erosion has followed 
the removal of vegetation in some places. The valley floors range 
from 2,000 to 3,000 meters above sea level, and this lower eleva- 
tion means milder temperatures than those of the Altiplano. Two 
of Bolivia's most important cities, Sucre and Cochabamba, are 
located in basins in this region. 

Lowlands 

The eastern lowlands include all of Bolivia north and east of the 
Andes. Although comprising over two-thirds of the national terri- 
tory, the region is sparsely populated and, until recentiy, has played 
a minor role in the economy. 

Differences in topography and climate separate the lowlands into 
three areas. The flat northern area, made up of Beni and Pando 
departments and the northern part of Cochabamba Department, 
consists of tropical rain forest. Because much of the topsoil is under- 
lain by clay hardpan, drainage is poor, and heavy rainfall periodi- 
cally converts vast parts of the region to swamp. The central area, 
comprising the northern half of Santa Cruz Department, has gentiy 
rolling hills and a drier climate than the north. Forests alternate 
with savanna, and much of the land has been cleared for cultiva- 
tion. Santa Cruz, the largest city in the lowlands, is located here, 
as are most of Bolivia's petroleum and natural gas reserves. The 
southeastern part of the lowlands is a continuation of the Chaco 



55 



Bolivia: A Country Study 

of Paraguay. Virtually rainless for nine months of the year, this 
area becomes a swamp for the three months of heavy rains. The 
extreme variation in rainfall supports only thorny scrub vegeta- 
tion and cattle grazing, although recent discoveries of natural gas 
and petroleum near the foothills of the Andes have attracted some 
settlers to the region. 

Most of Bolivia's important rivers are found in the water-rich 
northern parts of the lowlands, particularly in the Alto Beni (Upper 
Beni), where the land is suitable for crops such as coffee and cocoa. 
The northern lowlands are drained by wide, slow-moving rivers, 
the three largest of which — the Mamore, Beni, and Madre de 
Dios — all flow northward into the Madeira River in Brazil and 
eventually into the Amazon. Riverboats along the Beni and the 
Mamore carry both passenger and freight traffic; rapids on the 
Madeira prevent river traffic farther into Brazil. Near the Para- 
guayan border, shallow sandy streams carry the seasonal runoff 
into the Pilcomayo or Paraguay rivers. 

Climate 

Although Bolivia lies entirely within tropical latitudes, climatic 
conditions vary widely from tropical in the lowlands to polar in 
the highest parts of the Andes. Temperatures depend primarily on 
elevation and show little seasonal variation. In most locations, rain- 
fall is heaviest during the Southern Hemisphere summer, and yearly 
amounts tend to decrease from north to south. 

Northern lowland areas have a tropical wet climate with year- 
round high temperatures, high humidity, and heavy rainfall. Day- 
time highs average more than 30°C all year in most locations. The 
rain-bearing northeast trade winds, blowing across the Amazon 
Basin, bring significant rainfall amounts. Rain often falls in brief 
thunderstorms, sometimes accompanied by strong winds and hail. 

Central lowland areas have a tropical wet and dry climate. From 
October through April, northeast trade winds predominate, and 
the weather is hot, humid, and rainy. From May through Septem- 
ber, however, dry southeast trade winds take control, and precipi- 
tation is minimal. During this season, clear days and cloudless nights 
allow for higher daily maximums and lower nightly minimums than 
occur during the rainy season. Occasional incursions of strong winds 
from the south, called surazos, can reach this region during winter 
and bring cool temperatures for several days. 

The Chaco has a semitropical, semiarid climate. The northeast 
trade winds bring rain and hot humid conditions only from Janu- 
ary through March; the other months are dry with hot days and 
cool nights. Bolivia's highest maximum temperature, 47 °C, was 



56 




A view of the Alto Beni 
Courtesy Inter-American Foundation (Kevin Healy) 
A village in the Alto Beni 
Courtesy Inter-American Foundation (Jane Regan) 



57 



Bolivia: A Country Study 

recorded here. Surazos also affect the Chaco; their approach is usually 
signaled by a squall line. 

Temperatures and rainfall amounts in mountain areas vary con- 
siderably. The Yungas, where the moist northeast trade winds are 
pushed up by the mountains, is the cloudiest, most humid, and 
rainiest area, receiving up to 152 centimeters annually. Sheltered 
valleys and basins throughout the Cordillera Oriental have mild 
temperatures and moderate rainfall amounts, averaging from 64 
to 76 centimeters annually. Temperatures drop with increasing ele- 
vation, however. Snowfall is possible at elevations above 2,000 
meters, and the permanent snow line is at 4,600 meters. Areas over 
5,500 meters have a polar climate, with glaciated zones. The 
Cordillera Occidental is a high desert with cold, windswept peaks. 

The Altiplano, which also is swept by strong, cold winds, has 
an arid, chilly climate, with sharp differences in daily temperature 
and decreasing amounts of rainfall from north to south. Average 
highs during the day range from 15°C to 20°C, but in the sum- 
mer tropical sun, temperatures may exceed 27°C. After nightfall, 
however, the thin air retains little heat, and temperatures rapidly 
drop to just above freezing. Lake Titicaca exerts a moderating in- 
fluence, but even on its shores, frosts occur in almost every month, 
and snow is not uncommon. 

Population and Regional Distribution 

Bolivia's distinctive topography and ecology have had an endur- 
ing impact on settlement patterns. They also have figured in the 
relations among the country's diverse groups because the isolation 
most communities and regions faced until at least the 1950s con- 
tributed to cultural diversity. 

In mid- 1989 Bolivia had an estimated population of 6.6 million 
with a projected annual growth rate of 2.5 to 2.6 percent from 1980 
to 2000. The estimated population growth rate in 1989 was 2.1 
percent. A death rate of 13 per 1 ,000 inhabitants and a life expec- 
tancy of fifty-two years for males and fifty-six years for females 
in 1989 contributed to a population that was predominantly young 
(see fig. 5). Population was concentrated in the Altiplano and 
valleys. Even the steeper Yungas were moderately settled. The 
lowlands, the region with the most dramatic rise in population in 
recent decades, remained relatively sparsely settled. In the mid- 
1980s, over half of all Bolivians lived in the Altiplano, nearly 30 
percent in the valleys and the Yungas, and about 20 percent in 
the lowlands (see table 2, Appendix). 

Settlement patterns were uneven as well. Around Lake Titicaca, 
the mild climate and favorable growing conditions resulted in high 



58 



The Society and Its Environment 



population densities. Settlement dropped off to the south, but com- 
munities existed wherever there was adequate water along the 
Desaguadero River. East of Lake Poopo, settlements lay along the 
west-facing flank of the Cordillera Real on the alluvial fans of 
streams flowing from the mountains. There were also small settled 
valleys in the northern part of the Cordillera Occidental. In the 
south, the semiarid plateau supported only seminomadic shepherds. 

The population of the valleys clustered in the crowded environs 
of Cochabamba, Sucre, and Tarija. In the Yungas to the north, 
the convoluted terrain limited exploitation of the fertile soils, and 
the population was concentrated in areas with relatively ready access 
to La Paz. Settlement increased in response to population pres- 
sure in the Altiplano and government support for colonization in 
the decades following land reform. Population growth followed 
access and feeder roads in the region and was concentrated at the 
middle elevations. 

The lowlands' small population was scattered, except for the con- 
centration near Santa Cruz. Significant colonization developed 
along the Santa Cruz-Cochabamba highway. Large commercial 
farms producing cotton, rice, or sugarcane occupied the areas 
accessible to Santa Cruz. Elsewhere, large ranches, small towns, 
and settlements clustered along riverbanks where roads had not 
penetrated. Small subsistence farms were scattered along the 
perimeter of larger holdings and represented the spearhead of 
penetration into the forest. Indian tribes inhabited the sparsely set- 
tled northern half of the lowlands. 

Ethnic Groups 

The conquest of the Inca Empire brought the Spanish into con- 
tact with a stratified and ethnically diverse population in the region 
of present-day Peru and the Bolivian Altiplano, Yungas, and val- 
leys. The scant eighty years of Inca rule over the Aymara tribes 
brought large-scale population movements within the empire. Inca 
policies included the forced migration of potentially hostile (usually 
recently conquered) groups and their replacement by Quechua- 
speaking colonists {mitimaes) of unquestioned loyalty. Mitimaes reset- 
tled in the valleys around Cochabamba and Sucre; many Aymara 
were expelled to the extreme boundaries of the empire (see Pre- 
Columbian Civilizations, ch. 1). 

Spanish rule created a racially stratified society in which whites 
(blancos) and mestizos controlled Indians living in a form of inden- 
tured servitude (pongaje) on haciendas. The Spanish justified colonial 
policies as a means of converting the Indians to Christianity, a goal 
that was often subordinated to other needs. 



59 



Bolivia: A Country Study 



AGE-GROUP 



80 and over 












: 


i 














75-79 












c 


■ 














70-74 












q 


■ 














65-69 




























60-64 




kiAi r 








l_ CCMAI C 






55-59 




























50-54 




























45-49 


























40-44 


























35-39 


























30-34 


























25-29 


























20-24 








1 


















15-19 


























10-14 
























5-9 
























0-4 

















































600 400 200 200 400 600 

POPULATION IN THOUSANDS 



Figure 5. Estimated Population by Age and Sex, 1989 

However humane Spanish colonial policy was in theory, in prac- 
tice the system was filled with abuses. The policies were frequently 
used to exact tribute from the Indians to underwrite the coloniza- 
tion effort. In the encomienda (see Glossary) system, for example, 
the Spanish overlords collected tribute from the Indian communi- 
ties and, in return, were to see to their religious instruction (see 
The Economy of Upper Peru, ch. 1). Encomenderos, however, often 
exacted excessive tribute and appropriated Indian lands. The Span- 
ish also employed the pre-Columbian mita (see Glossary) to require 
all able-bodied adult males to report for labor in the mines at 
prescribed intervals. This conscripted labor, coming at a time when 
European diseases caused unprecedented epidemics among the 
Indian population, ruptured many communities and Indian kin- 
groups. The resulting elevated mortality rates, coupled with arbi- 
trary increases in the length of service, left some villages virtually 
devoid of adult males. 

Indians fled to escape the intolerable conditions, many to the 
periphery of the mining communities themselves where they sur- 
vived by a variety of illegal, if widely tolerated, means. Others 
sought refuge on haciendas, where they were exempt from the mita. 
Urban domestic servants and artisans, called yanaconas, were exempt 



60 



The Society and Its Environment 



as well. The general upheaval of the colonial period spawned a float- 
ing, rootless population unattached to any specific Indian commu- 
nity. Such individuals often abandoned their native language and 
way of life; they formed the basis of a class that was neither so- 
cially nor culturally Indian. 

This group, added to the offspring of Spanish-Indian unions, 
rapidly gave rise to a population of mestizos of uncertain social 
position. Mestizo offspring of marriages recognized by the dominant 
Hispanic rulers were frequently assimilated by the ruling group. 
Illegitimate offspring of Spanish men and Indian women were usu- 
ally taken in by their mother's kin. Alternately, if they had received 
some education or training, they joined the ranks of urban arti- 
sans and petty merchants. They swelled the ranks of a distinct so- 
cial group that was Spanish speaking and closer in culture to the 
rulers than to the mass of rural Indians, yet clearly separate from 
the Hispanic elite. 

With the gradual decline of the mining enterprises and the end 
of the colonial period, most Indians found themselves tenants on 
large estates that depended on entailed labor to turn a profit. Free 
Indian communities remained on the less desirable lands. Pres- 
sures on these communities from further expansion of the hacien- 
das depended on the level of agricultural profits in a given region. 
Independence brought little change; the small white elite remained 
firmly in control. Their wealth throughout most of the postindepen- 
dence era rested on their agricultural estates, and they firmly resisted 
any effort to change the status or outlook of their resident labor 
force, the Indian peons. As a result, the economic and social cul- 
ture of the hacienda, and with it that of the Indians, continued 
into the twentieth century. 

Ethnicity remained the focus of much of national life in the 1980s. 
It was a continuing force in the social relations of individuals and 
communities. Ethnic identity — always somewhat fluid — became 
considerably more so following the changes of the 1952 Revolu- 
tion. The ethnic hierarchy with whites at the pinnacle and the mass 
of Indians at the bottom continued, although the possibilities for 
those at the lower level to rise improved. 

Bolivia's principal groups were a small number of whites, a 
larger, more fluid and diverse group of mestizos, and a majority 
of Quechua or Aymara Indians. Whites were sometimes lumped 
with mestizos and called mistis (the Aymara version of mestizo). 
One commonly used term, cholo, referred to an upwardly mobile 
Indian — one anxious to assume the norms and identity of a mestizo. 
Terminology varied by the region, class, and ethnic affiliation of 
the speaker. 



61 



Bolivia: A Country Study 

A number of minority groups also existed. The Callahuaya, a 
linguistically distinct subgroup of the Aymara, lived in Munecas 
and Franz Tamayo provinces in La Paz Department. The group 
was widely known for its folk medicine, and many, if not most, 
of the men earned their livelihoods traveling among the weekly mar- 
kets held throughout the Andes. Those who marketed might speak 
Quechua, Aymara, and Spanish in addition to their native Calla- 
huaya. There were also a small number of blacks, the descendants 
of the few slaves imported during the colonial era. The Spanish 
rejected African slaves as a source of labor for the mines, regard- 
ing them as being unable to stand the rigors of the cold or the alti- 
tude. Most blacks lived in the provinces of Nor Yungas and Sur 
Yungas in La Paz Department. Significant numbers of Europe- 
ans migrated before and during World War II. In the mid-1980s, 
large German-speaking communities existed in La Paz and Santa 
Cruz. Colonization in the Oriente in the 1960s and 1970s also 
brought small numbers of Asians to the region around Santa Cruz. 

Lowland Indians 

Before Spanish intrusion, the eastern lowlands were an area of 
extreme cultural and linguistic diversity. The region was the ter- 
minus of several major population movements. Tribes ran the 
gamut of technology and social organization from nomadic hun- 
ters and gatherers to sedentary agricultural chiefdoms. The larg- 
est and best known of these groups, the Chiriguano, successfully 
resisted a number of Inca military forays into their territory. Con- 
siderable trade also occurred between the chiefdoms in the Altiplano, 
Yungas, and valleys and these tribes in the lowlands. 

The Spanish sent periodic expeditions through the area in search 
of the land of the Great Tiger Lord (El Gran Paititi), whose wealth 
was rumored to rival even that of the Inca. The indigenous popu- 
lation's primary contact with Europeans, however, came through 
the Jesuit missions of the seventeenth and eighteenth centuries. The 
mission territory remained off-limits to other Spaniards until the 
Jesuits' expulsion from the New World in 1767, thus sparing the 
Indians there the worst abuses of colonial rule. Settlers then en- 
tered the region, bringing new diseases and instituting a level of 
exploitation that ranged from forced labor to outright slavery. Con- 
ditions reached their nadir during the Rubber Boom in the early 
twentieth century. Some Indians survived by fleeing to less acces- 
sible areas of the tropical forest; others adopted the way of life of 
the Oriente lower class. 

Both the numbers and the way of life of the lowland Indians con- 
tinued to decline through the 1980s. Rough estimates put the 



62 



The Society and Its Environment 



lowland Indian population at perhaps 100,000 in the early 1980s. 
The main ethnic groups or linguistic families were Pano, Mataco- 
Mac'a, Uru-Chipaya, Quechua, Tacana, Arawak (Mojo), Tupi- 
Guarani, Chiquitano, and Aymara. These were divided into nearly 
thirty subgroups ranging in size from 10 to 20,000 persons (see 
fig. 6). 

Bolivia lacked a coherent national policy on Indian affairs. The 
criminal code made some provision for defendants deemed "without 
civilization" and therefore not criminally responsible for their trans- 
gressions. The national government made only sporadic attempts 
to protect the remaining Indians from abuses or displacement by 
the growing numbers of settlers. Missionaries, including the New 
Tribes Mission, the South American Mission, and the Summer 
Institute of Linguistics, actively proselytized among the tribes. Fun- 
damentalist groups were particularly interested in "untouched 
tribes." Critics charged that the missionaries undermined the in- 
digenous way of life and left their converts vulnerable to exploita- 
tion by others. Others suggested that the missionaries at least 
protected their charges from the worst abuses of whites and mestizos. 

Altiplano, Yungas, and Valley Indians 

In 1989 about 25 percent of Bolivians spoke Aymara and 30 per- 
cent Quechua. La Paz Department had the heaviest concentrations 
of Aymara speakers, although small communities of Aymara were 
scattered throughout the Altiplano. Increased migration in the 1950s 
gave rise to a sizable urban contingent of Aymara in La Paz, as 
well as significant numbers in the Yungas and the lowlands. 

Quechua were found throughout the Altiplano and the intermon- 
tane valleys of central and southern Bolivia. The largest popula- 
tions resided in the departments of Cochabamba, Oruro, Potosi, 
Chuquisaca, and Tarija. The diversity of habitats that they occupied 
contributed to significant regional variation. Some authors noted 
more dialectal diversity in Bolivian Quechua than in Aymara. In 
both languages, Bolivian dialects were mutually intelligible to all 
other speakers of the tongue. 

Language served a major role in shaping ethnic identification 
and relations. Traditionally, the inability to speak Spanish had con- 
tributed to the vulnerability of the Indians. Mestizos and whites 
controlled access to the larger society through their command of 
Spanish. Until the latter part of the twentieth century, only minute 
numbers of Quechua and Aymara were bilingual; for many of these, 
competence in Spanish was simply a step in severing their links 
to their Indian identity. 



63 



Bolivia: A Country Study 



•7 ; 



(D 1 ( o 



fa' («24 



Ethnic group 

boundary 
® National capital 
• Populated place 
A Family 
1 Dialect 

50 1 00 1 50 Kilometers 

I — 1 — H — h 1 

50 100 150 Miles 



_A 2 



*14 



G23 



V 



Titie 
F 



Trinidad) k 



' 28 i 

! ' ; G 



E13 ifj) 



^''Cochabamba> . I 

,-~ N \ Santa \ 

Lake. >| ) ,' ~ \ CrL/Z 

°\ ^ v- - 



|! ^12 



A 



B 4 

^16 



S3 



4 ARAWAK(MOJO) 

1 Ignaciano y trinitario 

2 Baure 

B MATACO-MAC A 

3 Mataco 

4 Chulupi 

5 Chacobo 

6 Pacawara 

7 Yaminawa 
D T AC AN A 

8 Araona 

9 Cavinena 

10 Ese ejja 

1 1 Tacana 



E TUPI-GUARANI 



H CHIQUITANO 



12 


Ava e izozeno 


24 Itonama 


13 


Guarayo 


25 Leco 


14 


Guarasug'we 


26 More o itenez 


15 


Siriono 


27 Movima 


16 


Tapiete 


/ QUECHUA 


17 


Yuqui 


28 Yuracare 



F URU-CHIPAYA 

18 Chipaya 

19 Uru 
G AY MAR A 

20 Ayoreo 

21 Bororg 

22 Canichana 

23 Chimane y moseten 



J OTHER DIALECTS 

29 Paunaca 

30 Kusikikia 

31 Kitemoka 

32 Yurukankia 



Source: Based on information from Instituto Boliviano de Cultura, Instituto Nacional de 
Antropologia, and Sede Nacional del Instituto Andino de Artes Populares, Mapa 
Etnolingutstico de Bolivia, La Paz, 1988. 



Figure 6. Major Ethnolinguistic Groups, 1988 



64 



The Society and Its Environment 



Data from the 1976 census revealed that, for the first time in 
the country's history, a majority of Bolivians spoke Spanish, one 
of three official national languages. Slightly more than one-third 
of the population were monolingual Spanish speakers; the same 
proportion were bilingual or trilingual in Spanish and one or more 
indigenous languages. Official figures showed an absolute and rela- 
tive drop in the number of monolingual Indians. Between 1950 
and 1976, the number of monolingual Quechua Indians dropped 
by nearly 40 percent. The number of monolingual Aymara speak- 
ers declined by more than half over the same period. In 1950 more 
than 60 percent of all Bolivians were monolingual speakers of an 
indigenous language; by 1976, however, only one-fifth fit this 
classification. This trend was even more pronounced in larger 
cities. By the mid-1980s, surveys found a scant 1 percent of the 
population of department capitals to be monolingual Quechua or 
Aymara speakers. Sociolinguist Xavier Albo cautioned, however, 
that these surveys underestimated the number of monolingual 
Indian speakers. 

In practice, Spanish and indigenous languages were intermixed 
to a large extent in regional dialects. Indeed, Quechua and Span- 
ish in Cochabamba were so intermingled that observers dubbed 
the local dialect Quechuafiol. In other regions, too, Aymara or 
Quechua vocabulary relied on extensive borrowing from Spanish 
coupled with indigenous suffixes. A lexicon of Spanish borrowings 
included kinship terms, forms of address, place-names, and much 
of the vocabulary for food, clothing, and tools. 

So-called social dialects also reflected this intermixture of Span- 
ish and indigenous languages. For example, three Aymara dia- 
lects — known as patron, radio, and missionary — differed from the 
version spoken by natives as a result of the influence of Spanish. 
Patron Aymara, used by Spanish speakers in positions of authority 
over monolingual Indians, had a limited lexicon and relied on ex- 
tensive Spanish borrowings. Radio Aymara was used by radio an- 
nouncers who, although they were native speakers of the language, 
were translating directly from Spanish. It tended to appropriate 
Spanish linguistic categories and also borrowed many words. Mis- 
sionary Aymara also superimposed Spanish on the indigenous lan- 
guages to a large extent. 

As the numbers of bilingual Indians grew, a shift in the pattern 
of bilingualism occurred. Early in the twentieth century, for ex- 
ample, virtually everyone in the city of La Paz spoke or under- 
stood Aymara. Spanish speakers learned it in childhood. Until the 
Chaco War (1932-35), Aymara was the only means of communicat- 
ing with underlings. Among contemporary pacenos (residents of La 



65 



Bolivia: A Country Study 

Paz), however, the Aymara were bilingual, whereas native Span- 
ish speakers were monolingual. 

Changes beginning in the 1950s brought Indians into greater 
contact with national society. Increasingly, Indians themselves 
gained access to national political institutions at the same time that 
reforms gave them a greater measure of control over their lives. 
Whole communities gained access to consumer goods, governmental 
services, and educational opportunities unavailable a generation 
earlier. Those accustomed to dealing with Indians as a subservient 
underclass, however, found these improvements hard to accept. 

Despite extensive changes in the relations among ethnic groups, 
the cultural categories and vocabulary that non-Indians customarily 
used in talking about ethnicity remained in general use. Indio 
(Indian) was still a term of disparagement, carrying with it a vari- 
ety of negative connotations and implying intellectual inferiority 
and backwardness. In response to the pejorative meanings com- 
monly attached to indio, the government substituted the term 
peasant (campesino) in official pronouncements following the 1952 
Revolution. Nonetheless, improvement in social status usually 
meant becoming a mestizo. 

Indians focused their loyalties on their local community rather 
than on some abstract sense of a common ethnic identity. These 
loyalties extended outward in concentric circles from family to 
neighborhood to village. Regardless of how much neighbors might 
fight and litigate with each other, they united in quarrels with rival 
villages. Factionalism and solidarity existed side by side in the local 
setting, implying simply a different arena of action. 

By the late 1960s, small but growing numbers of educated Indi- 
ans could be found in the professions, especially teaching. Although 
education was predicated on the goal of "Hispanicizing" the in- 
dividual, some educated Indians — especially those teaching in more 
remote areas and those with fewer years of teaching experience — 
retained a strong positive orientation toward their ethnic back- 
ground. These educated Aymara and Quechua speakers formed 
the nucleus of a genuinely Indian intelligentsia. The 1970s and 
1980s saw a fluorescence of Indian intellectual groups and centers. 

Mestizos and Cholos 

Mestizos and cholos, technically those of Spanish and Indian de- 
scent, constituted 25 to 30 percent of the population. Geograph- 
ically, this was the most widely distributed of ethnic groups; 
economically and socially, the position of mestizos was equivocal. 
Because all of the so-called racial terms connoted social status rather 
than racial background, they were applied indiscriminately and 



66 




67 



Bolivia: A Country Study 

often interchangeably. A wealthy, upper-class person of mixed 
blood, for example, might be considered white, whereas a poorer 
one might be termed a mestizo. An Indian might be called a cholo 
in one situation or a campesino in another. 

During the colonial era, cholo was a generic term used to describe 
any person who had at least one Spanish grandparent. Over the 
years, a more specifically value-laden meaning evolved. Although 
it still carried a purely racial denotation, it also connoted an up- 
wardly mobile Indian, in the somewhat negative sense of an ag- 
gressive social climber. Some writers have viewed cholos as an 
intermediate, transitional group between mestizos and Indians. 

Regardless of the status differences between cholos and mestizos, 
the cultural criteria of language, urban orientation, livelihood, man- 
ners, and dress defined both. Traditionally, mestizos and cholos filled 
the intermediate positions, such as clerk, small-scale merchant, 
hacienda overseer, and lower-level government official. Often those 
who had recentiy begun the transition to cholo were unskilled laborers 
or self-employed vendors and artisans. 

The transition from Indian to cholo or mestizo required at least 
a change in residence. By migrating to an urban area, an Indian 
might assimilate and become thoroughly mestizo in aspirations and 
identity. Assuming mestizo identity required not only a change in 
style of clothing and livelihood but also sufficient facility in Span- 
ish to speak with a locally acceptable accent. Complete assimila- 
tion was difficult to accomplish in one generation, however. More 
typically, the migrant's children came to consider themselves mes- 
tizos or cholos as they were educated and became adapted to urban 
ways (see Urbanization, this ch.). Within individual families, such 
social mobility often engendered tension. The ambiguity surround- 
ing ethnic categories and classification extended to the nuclear fam- 
ily. Full siblings could be viewed as members of different ethnic 
groups. Children who were relatively successful and adopted the 
dress and manners of cholos or mestizos deprecated their Indian 
parents and those siblings who were less educated or spoke Span- 
ish poorly. 

The 1952 Revolution changed the pattern of mestizo-Indian in- 
teraction. Traditionally, an elaborate etiquette ensured that mes- 
tizos, who considered themselves to be of higher status, received 
proper respect. Mestizos whose socioeconomic status declined after 
land reform, however, still wished to be treated with deference by 
Indians. Some, such as former landowners who had become im- 
poverished, responded by refusing to interact with Indians. Others, 
who had entered commerce and marketing, interacted socially with 
peasants who were their trading partners but avoided dealings with 



68 



The Society and Its Environment 



their own former peons. Interethnic drinking patterns also changed 
in the years following the revolution, ceasing entirely in some 
regions, and becoming a new ethnic interaction in other regions. 

Whites 

Whites, or blancos, also known as the gente decente or gente buena 
(decent or good people), sat atop the ethnic pyramid of the late 
1980s. They represented roughly 5 to 15 percent of the popula- 
tion. Socioeconomic and cultural boundaries rather than narrow 
racial criteria marked bianco status, although the vocabulary describ- 
ing whites (as well as other ethnic groups) was rife with racial ter- 
minology. Although whites were well aware of the admixture of 
Indian genes in their ranks, their sense of superiority rested largely 
upon the notion of ' ' purity of the blood" based on a strong sense 
of aristocracy and good lineage. 

The standards for membership in the white elite varied by region, 
as did the degree of traditionalism and adherence to the Spanish 
heritage. In general, the white elite was culturally homogene- 
ous and true to its Spanish heritage. Its members preserved the 
Hispanic traditions that dominated national society, even though 
these were not shared to a great degree by the mestizo and Indian 
majority. 

Whites were not as widely distributed geographically as mesti- 
zos, but they resided in both urban and rural areas. In the large 
cities and smaller towns, they traditionally held high- status posi- 
tions as professionals, wealthy merchants, or high-ranking govern- 
ment officials. In rural Bolivia, whites were the wealthy and 
influential patrones. Patron status implied not only financial indepen- 
dence but also a European life- style, a particular code of moral be- 
havior, a lineage traceable to colonial roots, local origin, and a 
leisurely attitude toward work. 

Whites saw their own sense of honor and morality as much 
stronger than that of mestizos or Indians. Theft, drunkenness, pre- 
marital pregnancy, and physical violence were censured among 
whites but expected among those of lesser status and, presuma- 
bly, breeding. Whites viewed upwardly mobile Indians or mestizos, 
even those mestizos who had amassed great wealth, as inveterate 
social climbers and pretentious upstarts. Deficiencies of lineage not- 
withstanding, mestizos or cholos of financial means could gain a 
measure of social acceptance through marriage to a daughter of 
an impoverished white family. The children of such a match, de- 
pending on their education and good fortune, were usually accepted 
as whites. 



69 



Bolivia: A Country Study 

Social Organization 
Rural Society 

Rural society reflected the complex history that communities ex- 
perienced during the past several centuries. Hacienda expansion, 
mining, and land reform affected regions and the communities 
within them differently. The uneven impact of national political 
and economic developments combined with ethnic diversity and 
ecological complexity to create a highly variegated social landscape. 
The contrasts between communities that had been free Indian set- 
tlements and those that had been dominated by a hacienda per- 
sisted into the land-reform era. Regions with a lengthy history of 
commercial farming differed from those geared primarily to sub- 
sistence agriculture. Finally, a basic cleavage existed between ha- 
ciendas of the densely populated Quechua and Aymara settiements 
in the Altiplano, valleys, and Yungas and plantations of the mes- 
tizo Oriente. 

Historically, Quechua and Aymara settlements were organized 
either as haciendas, with a resident labor force of peons who owed 
labor to the landowner, or as free communities. Social and eco- 
nomic differences characterized both types of settlements. On the 
haciendas, residents received different- sized plots of land in return 
for varying amounts of service. The holdings of former peons re- 
flected these initial inequities, as well as different levels of success 
in the decades following land reform. Free communities distin- 
guished two or three different categories of members. Those de- 
scended from the original villagers had full access to and security 
of land tenure. Others who came as landless laborers in the nine- 
teenth century generally had less land and less security. Still others 
were landless and relied on the ties of kinship or ritual kinship and 
an ingrained community ethos about sharing to gain access to a 
field. If surplus land existed, the landless generally could obtain 
a plot for nominal rent. 

Hacienda owners were casualties of the land reform. The wealth- 
iest left Bolivia or moved to La Paz. Many owners of medium- sized 
haciendas moved to a provincial town and entered commerce. In 
some regions, land reform proved to be merely the final in a series 
of economic reversals that had begun decades earlier. In Cocha- 
bamba, for example, hacienda owners had faced the combined 
problems of estate fragmentation, a contracting market, and a well- 
organized and militant peasantry since the turn of the century. For 
them land reform was the coup de grace. 

In other regions, land reform had a very minimal impact. 
Haciendas in the lowlands, the mid-sized haciendas of Monteagudo 
in Chuquisaca Department, and the vineyards of the Cinti Valley, 



70 



The Society and Its Environment 



also in Chuquisaca Department, were generally spared. Santa Cruz 
lacked the large, well-organized Indian population of the Altiplano, 
valleys, and Yungas. Landholders there not only escaped land re- 
form but also received the benefits of government development plans 
for the lowlands. Their major problem was securing an adequate 
(and adequately docile) labor force. They hired local subsistence 
farmers when possible and contracted with labor recruiters who 
toured Aymara and Quechua settlements hiring laborers for the 
sugarcane and cotton harvests. 

In regions of limited hacienda expansion, preconquest settiement 
and land-use patterns sometimes persisted. Individual extended kin- 
groups known as ayllus (see Glossary) tried to gain access to the 
resources of as many different ecological zones as possible. Dur- 
ing the Inca era, ayllus maintained permanent resident colonies in 
each of the three natural regions, creating what anthropologist 
John V. Murra has termed a "vertical archipelago." These colo- 
nies ensured the Incas access to the varied products of plateau pas- 
ture and field, transitional zones, valleys, and tropics. 

Peasants in the Altiplano, valleys, and Yungas preferred dispersed 
plots within a single natural region as well; in addition, some cul- 
tivated scattered plots in different regions. Such land-use strate- 
gies served as a hedge against the considerable uncertainty of 
farming in the Andes. Planting small amounts of a crop in a vari- 
ety of different locations ensured against total loss in such unpre- 
dictable localized disasters as hail and frost. In addition, these 
agricultural practices took full advantage of the extreme variation 
in environment within even short distances. 

The pattern persisted despite the upheavals of the colonial, post- 
independence, and modern eras. Under land-reform legislation, 
a kin-group's lowland holdings could be declared "haciendas" and 
made liable to expropriation. Development specialists frequently 
saw this mode of land use, scattering small plots at considerable 
distances from one another, as an impediment to agricultural pro- 
duction and economic development. Nonetheless, Andean peasants 
resisted efforts to consolidate their landholdings and acted to main- 
tain their dispersed and diversified plots wherever possible. 

In the late 1970s, anthropologists found ayllus in northern Potosi 
Department farming roughly the same territory they had held in 
the sixteenth century. The territory used by these ayllus encom- 
passed regions from the high plateau to semitropical valley bot- 
toms. The distance from the highest pastures to the lowest fields 
was more than 100 kilometers and as much as 2,000 meters in 
altitude. It took two weeks with fully loaded llamas to traverse the 



71 



Bolivia: A Country Study 

territory. Households had access to the products of each region 
either by producing or by exchanging them with kin. 

The typical pattern of exchange saw llama herders loading their 
pack animals after harvest and traveling to the valley bottoms. Even 
households that did not have formal control of plots in other regions 
would spend a good part of the year in different territories. This 
seasonal movement gave all inhabitants a detailed, extensive knowl- 
edge of the habitats their territory encompassed. 

Before 1952 most villages shared little sense of community with 
neighboring groups or the nation as a whole. Political participa- 
tion, especially in Indian communities, was negligible; powerful 
outsiders — mestizos or whites — mediated links to the larger soci- 
ety. In either case, the community itself remained a largely self- 
sufficient, nonmonetary society with the nuclear family as the basic 
social unit. Strong kinship and ritual kinship ties contributed to 
social cohesion, but little additional community solidarity existed. 
A family's existence centered on its lands and a complex system 
of community work and fiesta obligations. 

The reforms in the 1950s brought extensive changes to Aymara 
and Quechua communities. Agrarian reform and universal suffrage 
meant more than simply transferring land titles, eliminating onerous 
work obligations, or conferring voting rights. Many of these re- 
forms had already been reiterated in every legal and constitutional 
change since the time of Simon Bolivar Palacios, who began the 
postindependence era with decrees calling for distribution of land 
to landless Indians, equality for all, and the end of compulsory labor. 
The changes of the 1950s fundamentally altered Indians' relation- 
ship to the larger society. Political and economic links to town, city, 
and nation no longer remained the exclusive monopoly of mesti- 
zos and whites. Increasingly, Indians themselves served as their 
own intermediaries and power brokers (see Ethnic Groups, this ch.). 

Overall, the postrevolutionary period from the 1950s to the 1980s 
did much to erode the isolation of rural society; peasants came into 
contact with national society in ways unanticipated by an earlier 
generation. Improvements in communications (radios) and trans- 
portation (roads) made peasants aware of alternatives. Before the 
1952 Revolution, only a few peasant products had been sold through 
mestizo intermediaries or hacendados. The revolutionary reforms 
generated an explosion of markets and of marketing networks. In 
some regions, mestizo intermediaries still played a prominent role; 
indeed, many former hacendados became intermediaries when they 
lost their lands. In many areas, however, marketing became a career 
for Indian and cholo women. 



72 



The Society and Its Environment 



Increasing population pressure in the Altiplano and expanding 
economic opportunities elsewhere led to large-scale migration. 
Migrants' experience with the world beyond the hacienda gave vil- 
lagers a new and very different connection with national society. 
Educational opportunities increased dramatically at every level. 
Traditionally, hacienda owners had done everything possible to 
limit their laborers' access to schools. Some even expelled peons 
who dared to send their children to school. Increased educational 
opportunities for young Indians expanded their options for earn- 
ing a living. Like migrants (and the educated were frequently those 
who migrated), these individuals became a resource for their fam- 
ilies and communities. So, too, did the increasing numbers of young 
men serving in the military (see Urbanization, this ch.). 

The rise of peasant organizations and administrative reforms 
meant job opportunities on the local level. Peasant organizations 
offered many individuals a springboard to improve their own sta- 
tus at the same time that they gave communities some control over 
local affairs. These developments sharpened factionalism among 
communities. Neighboring settlements, which might have had lit- 
tle interest in each other's existence a decade earlier, for example, 
found themselves vying to be designated as the canton seat (see 
Departmental and Local Government, ch. 4). Land reform made 
ex-hacienda peons and Indians in neighboring free communities 
rivals for haciendas acquired in the twentieth century. 

Factionalism within communities sharpened as well. The vari- 
ous hamlets making up a single settlement often found little be- 
sides the community's school and fiestas as points of common 
interest. Marriages between various hamlets were a valuable link, 
as in-laws could serve as go-betweens in disputes. 

Consensus formed the basis of community decision making; 
strong disagreement meant that a decision had to be postponed, 
or participants would seek another solution. In order to resolve 
pressing business, communities sometimes scheduled meetings at 
times that were inconvenient to opponents. The strong-minded 
could boycott meetings and refuse to comply with community de- 
cisions. Households that felt deeply about a project would some- 
times go ahead and begin work in the hope that the recalcitrant 
would eventually follow suit. Such community- wide projects as road 
improvements and school buildings often existed in varying stages 
of completion, waiting for needed funds or for disinterested par- 
ties to finish their portion of the work. Villages were reluctant to 
involve outside authorities to pressure dissenters into compliance. 

The reforms of the 1950s highlighted the need for a knowledge 
of Spanish as communities increased their dealings with the 
government. Migrants who returned to their home communities 



73 



Bolivia: A Country Study 

during the 1950s and 1960s having learned Spanish played a more 
prominent role in community affairs. As most communities resolved 
disputes stemming from land reform, however, the volume of deal- 
ings with the national government declined. An older pattern of 
leadership reasserted itself, and seniority and success in the fiesta 
system again emerged as major criteria in selecting leaders. The 
fiesta system in its classic form consisted of a hierarchy of civil and 
religious offices, each of which entailed specific duties {cargos) and 
obligations. An individual gained prestige through completion of 
the cargos and upon finishing the entire hierarchy became a respected 
community elder. The most prominent offices were those where 
an individual assumed the sponsorship of a community fiesta 
celebrating a Roman Catholic feast or saint's day. 

The organization of fiestas varied. Mestizo sponsors could can- 
vass their settlements for donations, which limited their own finan- 
cial outlays. In Indian communities, where the sponsor bore most 
of the cost, the fiesta required a major financial sacrifice. In one 
survey, sponsors of major community fiestas spent from 12 to 80 
percent of their cash income from the sale of agricultural products 
to discharge their fiesta responsibilities. On the whole, however, 
communities spent much less than they had before agrarian reform. 
Fiestas also required an enormous expenditure of time, as spon- 
sors began planning for the most prominent fiestas years in advance. 

The fiesta was a forum for the acceptable display of wealth and 
socioeconomic status. An individual gained significantly in pres- 
tige and standing by sponsoring the major fiestas. Friends and rela- 
tives often helped by offering food, drinks, and money. Those who 
provided the assistance could expect similar help when they assumed 
a comparable office. Gifts were recorded in written form, and par- 
ticipants had a strong obligation to reciprocate. 

The late 1970s and 1980s were not easy for rural Bolivians. The 
peasant-military alliance that had been forged in the 1960s ended 
in 1974 with the bloody repression of a peasant demonstration (see 
Political Forces and Interest Groups, ch. 4). In general, the turn- 
stile governments of the late 1970s and early 1980s were unsym- 
pathetic to peasants. Economic stabilization packages exacted a 
heavy toll. The generally difficult economic situation of the 1980s 
curtailed nonfarm employment at the same time that increasing 
population put pressure on land. 

Urban Society 

The Working Class 

Urban artisans, street hawkers, and servants had been part of 
city life since the colonial period. Bolivia's modern working class, 



74 




A Quechua Indian musician in Potosi Department 

however, had its roots in the tin-mining boom of the late nineteenth 
and early twentieth centuries (see The Liberal Party and the Rise 
of Tin, ch. 1). Miners, transport workers, and manufacturing em- 
ployees formed the core of this group. Added to this were a motley 
crew of self-employed artisans and small-scale retailers. 

The prosperity of the various segments of the working class varied 
significantly. Wage earners who were permanently employed in 
well-established factories represented an elite. They benefited from 
the reforms of the 1952 Revolution. The self-employed, who were 
far more numerous, were generally not so fortunate. At best, their 
activities could be as profitable as contract work or comparable to 
regular wages. At worst, their position was marginal indeed. Com- 
petition was intense; artisans and small manufacturers were handi- 
capped not only by their sheer numbers but also by illegal imports 
of cheap manufactured goods. They received little in the way of 
government assistance, although the Roman Catholic Church and 
some international aid agencies helped by offering technical as- 
sistance and organizing cooperatives. 

The self-employed who were successful were generally able to 
specialize, to remain flexible in their economic activities, and to 
coordinate effectively the family's efforts to secure a livelihood. 
Families did well when they were able to pursue diverse activities 
as their own options varied and the market changed. The economic 
activities of women were an essential component in the family's 



75 



Bolivia: A Country Study 



success or failure. They embodied flexibility as they balanced the 
demands of marketplace and family. 

The working class as a whole experienced numerous economic 
difficulties in the 1980s. Wage earners suffered from the rampant 
inflation of the early to mid-1980s (see Growth and Structure of 
the Economy, ch. 3). Unionized workers frequently protested that 
they bore an unfair burden under the economic stabilization pack- 
ages enacted by the government of Victor Paz Estenssoro (see 
Formal Sector, ch. 3). Miners, facing reduced employment in that 
industry, were especially militant. 

An ideology rooted in the shared struggle for improved condi- 
tions united organized workers. Railroad workers began union or- 
ganizing early in the twentieth century; miners organized in the 
1910s. Labor leaders mobilized their followers through appeals to 
the memory of such massacres as those at Uncia in 1923, Catavi 
in 1942, Villa Victoria in 1949, and, more recendy, the Catavi-Siglo 
XX mines in 1967 (see The Republican Party and the Great Depres- 
sion; the Rise of New Political Groups, ch. 1). 

The sense of class consciousness and camaraderie that marked 
the working-class ethos at times conflicted with other values. Sen- 
timents of class solidarity, for example, might be overshadowed 
by the overwhelming desire for upward mobility both for the worker 
and for his or her children. To attain this end, lower-status per- 
sons were always ready to enlist the support of a patron, a power- 
ful, influential person of higher status, such as a local landowner, 
who could help a client, such as a peasant, with favors such as ob- 
taining a license for selling produce in a local market. In return, 
the patron would gain the personal support of the client. Patron-client 
ties thus cut across class boundaries. 

A significant portion of the working class was bilingual. In depart- 
ment capitals, more than one-third of the population was trilingual 
or bilingual in Spanish and Quechua and/or Aymara. The Span- 
ish spoken by these individuals might be heavily accented, but it 
was understandable. They were frequently better educated than 
peasants and usually at least minimally literate. 

Cities, and in particular mining centers, were a linguistic melt- 
ing pot. Although Quechua predominated among the workers, 
many spoke Aymara and Spanish as well. Aymara speakers learned 
Quechua in order to communicate with the majority of miners. 
Spanish became the preferred language in marriages where the cou- 
ple spoke different languages, in part because parents recognized 
that their children needed a solid grounding in that language for 
social advancement. 



76 



The Society and Its Environment 



Despite the sharp dichotomy between city and countryside in 
life-style and livelihood, working-class families maintained numer- 
ous links between the two. Mining provided an excellent example 
of the complex, ongoing relations between the urban working class 
and the countryside. Even before the sharp drop in employment 
in mining in the 1980s, the transition from farming to full-time 
employment in the mines was a lengthy one. Peasants might begin 
with part-time seasonal or piece-rate work — a strategy that could 
continue indefinitely as a supplement to earnings in agriculture 
or one that could evolve into regular full-time employment. 

Even full-time miners depended on peasants for critical supple- 
ments to their livelihood. Miners' wives toured the surrounding 
countryside after harvest, trading commissary goods that they had 
obtained relatively cheaply for agricultural products. They timed 
their purchases to take full advantage of the fall in food prices im- 
mediately after the harvest. 

Miners' families also reflected their rural Indian heritage by fol- 
lowing a pattern of exchange, sharing, and cooperation. The tech- 
niques that peasant communities had long used to ensure families 
a minimum subsistence in difficult times were adapted to the min- 
ing town. Families created both money and labor pools to increase 
their productive power. In addition, they continued to plant gardens 
to produce at least part of their subsistence. 

In larger cities, working-class life was organized around a vari- 
ety of associations. In addition to union locals, neighborhoods often 
had a women's association, soccer team, and councils to mobilize 
for civic action. Overlapping membership in neighborhood associ- 
ations cut across occupational specialties. Factory workers, petty 
merchants, and artisans were drawn into a social life that reinforced 
class consciousness. 

The urban working class was also linked through its own fiesta 
system. Urban fiestas were organized by neighborhood and by oc- 
cupational group. Factories held their own fiestas, and older es- 
tablishments often had a shrine to their patron saint on the premises. 
A senior employee typically sponsored the annual fiesta, sometimes 
helped by a cash advance from the employer. Celebrations were 
less elaborate during economic downturns. From time to time, 
municipal governments regulated various aspects of fiestas as either 
too expensive or "inappropriate to urban living." Although the 
details of urban fiestas differed significantiy from those held in rural 
communities, they were understandable to all potential participants. 

The Upper Class 

The traditional Bolivian upper class built its status on the trian- 
gular base of wealth, political power, and Spanish heritage. Its 



77 



Bolivia: A Country Study 

wealth was based on a virtual monopoly of agricultural produc- 
tion, mineral resources, and commerce. For most of the country's 
history, the upper class constituted the only educated sector of so- 
ciety and the only one that had contact with and an understand- 
ing of the world beyond Bolivia. Although generally of mestizo 
origin, its members considered themselves white and identified with 
European culture. They formed a cohesive enclave who kept their 
status intact through intermarriage and regarded their privileged 
position as a birthright. 

The 1952 Revolution had a profound impact on the elite. They 
retained a prominent position in society, but the very foundations 
of their status became subject to challenge. The concepts of racial 
superiority and purity of the blood, nonetheless, continued to be 
central to the elite's class consciousness (see Ethnic Groups, this 
ch.). Outsiders, except for European Roman Catholics, found ac- 
ceptance by this group difficult. An aspirant to upper-class status 
faced a critical appraisal of his physical features and his name (for 
signs of Indian derivation). Social climbers merited disdain, often 
expressed in terms of prejudice toward those of Indian or cholo 
origin. 

The changes begun in the 1950s made both upward and down- 
ward mobility increasingly possible. Growing numbers of Bolivians 
with "new money" emulated the life-styles of the elite. At the same 
time, the loss of land relegated some former hacienda owners to 
regular jobs in the city or even to poverty and dependence on the 
generosity of relatives. 

Despite the change in actors, traditional values and social roles 
remained relatively intact. Men continued to follow the ideals of 
machismo (see Glossary) and the patron. Machismo demanded that 
a man demonstrate heroism, forcefulness, a zest for action, and 
sexual prowess. The patron dispensed favors to his underlings — an 
action that demonstrated his power — and expected loyalty in return. 
The ideal of womanhood still emphasized the qualities of modesty, 
sacrifice, and motherhood. 

The Middle Class 

The middle class occupied an equivocal position. It ran the gamut 
in prestige and position from truck drivers and petty merchants 
to highly paid professionals and business owners and operators. 
Almost as much range existed within this class as between the two 
adjoining groups. For lack of common criteria, the middle class 
was defined largely in terms of occupational specialization and 
economic status: its members were successful merchants, white- 
collar workers in commerce or government service, and educated 



78 



The Society and Its Environment 



professionals lacking the family requirements for upper-class sta- 
tus. At its lower levels, the middle class faded into the more prosper- 
ous elements of the working class. In many ways, the differences 
between the middle class at its fringes and the adjoining upper and 
lower groups were of degree rather than kind. Both in ethos and 
in livelihood, the middle class shared much with those above and 
below it on the social scale. 

Social mobility and elite exclusiveness were the dynamics that 
formed the middle class. The group emerged from the upheaval 
of colonial society both through intermarriage between Spaniards 
and Indians and through the general influx of Indians into cities 
and towns. The modern middle class, however, received its impe- 
tus from the tin-mining boom. Tin mining created demand for edu- 
cated administrators and expanded the opportunities available to 
the middle echelons traditionally tied to commerce. Between 1900 
and 1950, the composition of the country's university-educated elite 
changed. Its percentage of clergy, doctors, and lawyers declined, 
while that of teachers and engineers grew. As with other wage earn- 
ers, salaried professionals remained vulnerable to economic re- 
versals. 

The wealthier members of the middle class tended to follow elite 
mores and aspired to an upper-class life-style and acceptance into 
that group. As one moved down the social scale, these values be- 
came less pronounced. Cholos, who were typically bilingual in Span- 
ish and one or more Indian languages, made up the lower levels 
of the middle class. They adhered less to Hispanic norms than did 
other members of the middle class, and they actually reflected the 
influence of their Indian heritage. A dichotomy existed between 
the identification and values of cholo men and women. Men ad- 
hered to Hispanic norms and values more closely, attempting to 
emulate that life-style. Women adopted an identity that blended 
indigenous and Hispanic elements. They often engaged in com- 
merce and were formidable businesswomen. 

Family and Kin 

A stable family life and widely extended bonds of kinship provided 
the most effective source of personal security. Although family and 
kinship practices varied among the disparate ethnic groups, both 
Hispanic and Indian traditions placed great stress upon bonds of 
responsibility among kins. No other institution endured as the fam- 
ily had, and none commanded greater loyalty. 

The nuclear household — a father and mother with their unmar- 
ried and dependent children — constituted the basic unit of family 
organization among the upper and urban middle classes. Within 



79 



Bolivia: A Country Study 

this household, children were reared, women played their major 
social roles, and men owed their primary obligations of economic 
support. Almost invariably based upon formal matrimony, includ- 
ing both civil and religious ceremonies, the family was extremely 
stable. 

The nuclear family seldom existed as a wholly independent unit. 
Partly as a result of the social and economic conditions of Bolivian 
life, bonds of loyalty, affection, and mutual responsibility with the 
extended kin of both spouses were strong and abiding. Few of an 
individual's activities or decisions did not, in the Hispanic view, 
affect the wider circle of family and kin. 

The ties of solidarity among kin were expressed in an active and 
highly ceremonial pattern of social life. The nuclear family spent 
much of its time making formal calls upon relatives and receiving 
such calls in return. Weddings, baptisms, and funerals were com- 
mand performances, even in cases involving distant relatives. In- 
deed, visits to kin and the round of family fiestas that accompanied 
each transition in an individual's life formed almost the entire so- 
cial life of many women. 

For the Quechua- and Aymara-speaking Indians, family and kin 
always provided a first line of defense against precarious economic 
circumstances. In many communities, the cooperative sharing of 
goods and labor among members of ayllus bolstered community 
stability throughout the vagaries of the past several centuries. Ayllus 
exercised control over the inheritance and use of lands held both 
collectively and individually by their members, and thus they pro- 
tected themselves from encroachments by outsiders. Strong bonds 
of kinship and intermarriage reinforced cohesion and a sense of 
community within the kin- group and the village. 

The Aymara and Quechua had a highly stable basic family unit. 
Marriage was the most significant social event in an individual's 
life. An elaborate series of rituals marked the highland marriages: 
courtship, formal betrothal, a number of different wedding ceremo- 
nies, the formal Roman Catholic marriage, the feast of the mar- 
riage godparents, the inheritance feast, the planting ritual, and the 
house roofing. The completion of the full series marked not just 
a new union of the couple and their families but the transition of 
the man and the woman to full adulthood in the community's eyes. 

Although the Indian couple typically began living together slightly 
before the betrothal, the actual ceremonies could extend over several 
years. When they were finally completed, the couple had received 
the wherewithal to function as an autonomous household. The com- 
munity had approved of their new social identity on numerous 



80 



The Society and Its Environment 



occasions. All that they received in the numerous ceremonies involved 
them in enough reciprocal obligations to last a lifetime. 

Kinship ties at all levels of Bolivian society remained so strong 
that those unrelated to one another often sought to establish bonds 
of ritual kinship through the set of relationships among a child, 
the child's parents, and his or her godparents, known as compadrazgo 
(see Glossary). In Hispanic and Indian traditions alike, persons 
related through compadrazgo — called compadres — should manifest the 
highest regard and loyalty toward one another. Among Indians, 
in addition, sexual relations between compadres (and sometimes their 
relatives) were considered incestuous and strongly condemned. For 
many of the historically dominant whites, compadrazgo extended the 
bonds of kinship and formalized pre-existing ties of friendship. For 
Indians and cholos, compadrazgo represented one of the few relations 
of trust with members of the dominant ethnic groups. 

Godparents were commonly selected at baptism and marriage. 
The compadres of baptism had well-defined ritual and economic ob- 
ligations at the ceremony itself, as well as for the feast that followed. 
The relationship established was between the child's parents and 
the godparents. The reciprocal obligations linking the two couples 
continued beyond the occasion; indeed, the tie continued even if 
the godchild died. At marriage, compadrazgo established a four- way 
relationship linking the couple, the compadres, and each spouse's 
parents. As in baptism, the godparents became obliged to contribute 
to the marriage ceremonies in specific ritual and material ways. 
Compadres had a moral obligation to take an ongoing interest in 
the success of the union. If the marriage failed, they were blamed 
as well as the couple and the respective families. 

Compadrazgo ties often cut across the boundaries of class and ethnic 
groups. Indians and cholos could ask wealthy and influential mes- 
tizos or whites to serve as godparents. In asking couples of higher 
status, a person was establishing a link of patronage. The lower- 
status person expected to gain assistance in dealing with the authori- 
ties and to share, by reflection, in his or her status as compadre. In 
return, the influential person received occasional small gifts of 
produce and personal services and, equally important, a loyal fol- 
lower. The choice of godparents was a sensitive barometer of eth- 
nic loyalties and identification. Ambitious cholos, anxious for their 
children's advancement, would chose higher-status mestizos in the 
hope that the godparents could assist the child's education and 
career. 

Compadres could also be of equal status. In this case, an individual 
might ask distant kin, close friends, or neighbors to be godparents. 
The advantage in asking neighbors or kin was that the parents knew 



81 



Bolivia: A Country Study 

their reputation and standing in the community more thoroughly. 
Among compadres of equal status, individuals tried to match the eco- 
nomic resources of the couples involved, so that the reciprocal 
obligations and gifts between the two families would balance more 
evenly. 

Migration and Urbanization 
Migration 

Migration has transformed social relations since the 1952 Revo- 
lution. Before the revolution, the average peasant's horizons were 
delineated by his or her village, those similar settlements surround- 
ing it, and a nearby mestizo town. Contact with the world beyond 
was limited to an occasional trip to the landlord's city residence 
or his other haciendas. Few peasants had actually lived in a city, 
worked in the mines, or served in the military. 

By the 1970s, however, most rural young adults could expect 
to spend at least part of their lives away from home. Many of these 
would migrate permanently to a city. Others would seek occasion- 
al wage labor to supplement their farm earnings. Some also mi- 
grated to foreign countries, seeking seasonal work on plantations 
in Argentina, in the ports of northern Chile, or in the Brazilian 
Amazon. 

Rural-to-urban migration typically constituted a lengthy process. 
A peasant might begin by working in a city during slack agricul- 
tural periods. Young men and women often had their introduc- 
tion to the city through marketing their families' farm products. 
In addition, military service gave young men an awareness of the 
larger society, as well as some experience in nonagricultural work. 

Migration rarely represented a decisive break with the commu- 
nity of origin. Migrants maintained complex, ongoing, and mutu- 
ally fruitful relations with their natal communities. They also served 
as liaisons with national society. The migrants' knowledge of Span- 
ish and greater familiarity with the government bureaucracy were 
invaluable resources. Former residents became particularly impor- 
tant after the 1953 enactment of the Agrarian Reform Law. In ad- 
dition to helping obtain land titles and working out agreements 
with the former landowners, they also continued to mediate be- 
tween their villages and the nation. 

Aid from kin and fellow villagers was essential to the success of 
migrants. Earlier migrants assisted those who followed by provid- 
ing temporary housing and help in finding work. Most migrants 
belonged to an association of former residents of their native vil- 
lage. These organizations offered recreation and assistance to 



82 



The Society and Its Environment 



migrants. The idiosyncratic job choices of individual migrants 
spawned unique patterns of occupational specialization. The major- 
ity of the migrants from one village, for example, became tailors 
with the help of an early migrant from the same setdement. In other 
instances, regional agricultural specializations formed the basis for 
occupational choices; butchers, for example, often came from catde- 
raising areas. 

Even highly successful, long-term migrants did not sever their 
ties with relatives and neighbors in the countryside. Migrants re- 
tained their rights to land. Women and children spent years in the 
village while husbands and fathers remained semipermanent city 
residents. Families routinely returned to the countryside to help 
during harvesting and planting. Grandchildren spent their vaca- 
tions with grandparents in the village. Many migrants continued 
to participate in community fiestas, concrete evidence of their will- 
ingness to continue to fulfill community obligations beyond those 
owed to kin. 

Bolivian governments had long promoted the notion of coloni- 
zation, especially in the lowlands. Plans were first put forth in the 
1830s, and formal proposals were outlined in legislation in 1886, 
1890, and 1905. Colonization did not occur, however, until after 
the 1952 Revolution. One of the goals of the victorious Nation- 
alist Revolutionary Movement (Movimiento Nacionalista Revo- 
lucionario — MNR) was to provide a safety valve for population 
pressure in the Altiplano by promoting "Bolivianization" of the 
frontier. Other objectives were to increase the production of domes- 
tic food crops and to integrate more farm families into the national 
economy. In the next three decades, both government- sponsored 
and spontaneous settlements fueled a population explosion. The 
main zones of growth were the region around Santa Cruz (Santa 
Cruz Department), the Alto Beni (Beni Department), and the 
Chapare (Cochabamba Department). From 1900 to 1950, Santa 
Cruz's population grew at less than 1 percent annually; between 
1950 and 1976, however, the annual rate climbed to more than 
4 percent. The sheer numbers of migrants created a land-rush 
atmosphere. In the province of Obispo Santisteban (Santa Cruz 
Department), authorities granted tides to 55 percent more land than 
the province encompassed. 

Because most migrants came from the overpopulated Altiplano, 
they entered sharply different environments. The Oriente had 
a highly distinct regional culture. A unique dialect of Spanish, 
known as castellano camba, identified Oriente natives. Plantations 
in the region, unscathed by the land reform, still had a resident 
labor force, but it was not organized into the cohesive community 



83 



Bolivia: A Country Study 

characteristic of the traditional hacienda. -Farming and herding in 
the Andes had little in common with the requirements of agricul- 
ture in the tropical lowlands. 

Official setdement projects ranged in approach from meticulously 
detailed planned colonies to the simple provision of a plot of land, 
some technical orientation, and assistance in gaining a land title. 
In general, government projects suffered from a lack of compe- 
tent technicians, poor coordination among the various agencies 
charged with assisting the colonists, and lack of continuity at the 
upper administrative levels. Land titles were rarely granted within 
the amount of time specified on the project. Roads were neither 
completed nor maintained according to plans. About half of the 
colonists abandoned their plots and moved on (see Land Reform 
and Land Policy, ch. 3). 

Only about 15 percent of the settlers who migrated to the region 
from the early 1950s through the early 1980s came as part of 
government- sponsored colonies. Nonetheless, spontaneous settle- 
ments, too, suffered from the poorly developed infrastructure. 
Migrants resorted to a variety of methods to produce cash crops 
and market them without losing most of the profit to intermedi- 
aries. In some colonies, settlers cut their own feeder roads. Like 
those in government- sponsored settlements, spontaneous colonists 
often had difficulty getting land titles. They lacked technical ad- 
vice and access to agricultural credit. In general, however, spon- 
taneous settlers managed to form organizations and to develop 
sufficient organizational savvy and community spirit to deal with 
the logistics of establishing farms in the Oriente. Surveys found 
that income in spontaneous colonies averaged 75 percent higher 
than in government-sponsored projects. 

One of the fastest- growing colonization regions in the 1980s was 
the Chapare, Bolivia's principal coca-cultivating area. Major rea- 
sons for the influx of colonists to this tropical New Jersey- size region 
were the completion of a United States-financed paved road from 
Cochabamba in 1972 and the take-off of the cocaine-exporting in- 
dustry in the late 1970s. By 1985 the population had burgeoned 
to 120,000, as compared with 80,000 in 1981 and 26,000 in 1967 
(see Narcotics Trafficking, ch. 5). Some press reports in 1988-89 
cited Chapare population figures as high as 200,000. A 1981 sur- 
vey found that most small-scale farmers in the Chapare were former 
highlanders, mainly from the upper Cochabamba Valley but also 
from Potosi Department, who resettled and cleared land for food 
and coca cultivation. 

The Oriente also attracted small numbers of Italian, Japanese, 
Okinawan, and North American Mennonite settlers. In contrast 



84 



The Society and Its Environment 



to native Bolivians, these settlers were often more educated, had 
better technical training, came with more capital, received larger 
parcels of land in better locations, and had more ongoing support 
from their own governments or sponsoring agencies. They usu- 
ally succeeded, although the turnover in a settlement's early years 
often nearly approximated the rates encountered in government 
colonies. 

The first settlers in a new community typically consisted of a 
group of men who began clearing plots. Most brought their fami- 
lies to join them as quickly as possible; beginning farming in the 
tropical forest required the whole family's labor. A colony's founders 
were frequently kin and compadres; these ties helped create a spirit 
of cooperation and community solidarity. Settlers used the same 
kinds of strategies that had permitted Andeans to survive through 
the centuries. Colonization itself was an extension of the "vertical 
archipelago." Colonists expanded their regional ties by farming 
in the new settiement zones. Like rural-urban migrants, they main- 
tained their links with their home villages. Kin sent gifts of food; 
colonists reciprocated with items of lowland produce. Those with 
land in the Altiplano continued to farm it and spent a good por- 
tion of the year there. 

Community organizations were synonymous with the commu- 
nity itself in a settlement's early years. They agitated for land titles 
and maintained order, settling everything from marital disputes 
to property boundaries. They functioned as self-made extension 
agencies: their meetings were a forum for sharing experiences, 
organizing for joint endeavors, and overcoming the isolation of the 
frontier. The organizations' influence often waned as a commu- 
nity aged, reflecting both the politico-economic climate and the com- 
munity dynamics. Solidarity declined as some settlers moved on 
and others spent more time away from their farms as wage laborers. 
New settlers, often members of a different ethnic group, bought 
out the original colonists, adding another element of divisiveness. 

The migrants' degree of success varied considerably. Some were 
supported by their families in the Altiplano, who did not own enough 
land for all their children but who could send a son or daughter 
to the Oriente. These moderately capitalized migrants became 
veritable entrepreneurs in the expanding Santa Cruz economy. 
Many others simply transplanted a marginal subsistence holding 
from the Altiplano to the tropical forest. Unsuccessful colonists 
generally cleared subsistence plots, farmed them for a few years, 
and then sold out to more capitalized farmers. Poorer settlers moved 
farther on toward the frontier, often clearing the land with de- 
structive methods. Many of these settlers destroyed tropical rain 



85 



Bolivia: A Country Study 

forests without conferring either the advantages of a stable system 
of swidden, or slash-and-burn, agriculture (which involved cutting 
down the forest, burning the dried debris, and planting crops over 
a period of two to three years) or those of permanent cultivation. 

Although subsistence farmers entered the cash economy to pur- 
chase a few essentials, they found the terms of exchange distinctly 
unfavorable. Price uncertainty added to the problems generated 
by lack of knowledge of the tropical ecosystem. Cheaper subsidized 
credit was available only to farmers with land titles. Rural inter- 
mediaries controlled most marketing and took a hefty share of the 
profits. 

The poor subsisted through a variety of stratagems. Even with 
the substantial increase in population, land reserves gave poorer 
families a sort of "safety net." A one- to two-hectare subsistence 
plot formed part of an intricate mix of income- generating and sub- 
sistence activities. The rural poor alternated between seasonal wage 
labor and subsistence agriculture. Some lived in town part of the 
year and found employment as street vendors, cargo carriers, con- 
struction laborers, or domestics. 

The massive numbers of migrants had a pervasive impact on 
regional society. Cambas, native lowlanders, felt a certain resent- 
ment against the Altiplano migrants, Kollas (see Glossary). Each 
characterized the other group in predictably negative terms. 
Migrants were easy to identify on the basis of language or accent. 
Discrimination against them ranged from poor treatment by shop- 
keepers to the refusal of service at restaurants. Santa Cruz natives 
of all classes made common cause against the newcomers. Regional 
loyalties cut across class lines. Occasionally, landholders were able 
to recruit the support of Cambas through appeals to regional soli- 
darity. 

Urbanization 

Cities, serving as administrative and trade centers, were an in- 
tegral part of colonial Bolivia. They were the domain of whites and 
mestizos who appropriated a share of the agricultural produce from 
the surrounding Indian communities. For most of the nineteenth 
and twentieth centuries, however, the population as a whole re- 
mained overwhelmingly rural; in 1900, for example, a scant 14 
percent lived in cities of more than 5,000 inhabitants. Although 
cities grew as mining and commerce expanded, only about one- 
quarter of the population were city dwellers in 1950. 

Massive urbanization on a scale sufficient to change the face of 
society was a postrevolution phenomenon. From the 1950s onward, 
cities grew disproportionately faster than rural Bolivia. From 1950 



86 



The Society and Its Environment 



to 1976, the three fastest-growing cities increased at a rate of 4.7 
percent annually; the fastest, Santa Cruz, at 6.9 percent. In the 
early 1980s, annual rates of increase in cities were nearly triple 
those of the countryside. The urban population increased at 3 to 
4 percent a year through the 1970s and most of the 1980s. 
Demographers projected comparable rates to continue to the end 
of the century (see fig. 7; table 3, Appendix). Analysts anticipated 
that urban residents would constitute 56 percent of the population 
by the year 2000. 

La Paz, founded in 1548 as a way station en route from the sil- 
ver mines of Potosf to Lima, was the largest city and had an esti- 
mated population of 992,000 residents in 1985. The population 
of Santa Cruz — long an insignificant frontier outpost — swelled to 
441,000 as a result of the postrevolutionary development of the 
Oriente. Other major cities included Cochabamba (317,000), Oruro 
(178,000), and Potosf (113,000). 

Bolivia's pattern of urbanization is exemplified in the growth 
of Cochabama. In 1900 Cochabamba consisted of 22,000 residents 
and included only 7 percent of the total departmental population. 
Over the next half-century, the city's population expanded at 2.5 
percent annually to 81,000 in 1950, when it contained 16.5 per- 
cent of the total departmental population. The pace of urban growth 
quickened to 3.5 percent annually between 1950 and 1976; by 1976 
Cochabamba consisted of 200,000 residents and included 28 per- 
cent of the overall departmental population. During this period, 
squatters pushed far beyond the city's previous southern and eastern 
limits; for example, Cochabamba' s airport, which had served as 
one part of the southern boundary, became surrounded by new 
urban communities. Between 1976 and 1986, urban growth inten- 
sified to 4.2 percent annually as the city encompassed 31 percent 
of the department's population. 

Migrants in search of employment accounted for an increas- 
ing share of Cochabamba' s growth. Demographers estimated that 
64 percent of the city's population expansion between 1976 and 
1986 resulted from migration. By 1986 more than one- third of 
Cochabamba' s residents had been born outside the city. The pat- 
tern of migration also changed in the 1970s and 1980s. In contrast 
to the previous predominance of migrants from rural communi- 
ties in Cochabamba Department, the percentage of migrants from 
the Altiplano climbed to 40 percent in 1976, to 54 percent in 1983, 
and to 60 percent in 1986. The increasing rate of migration re- 
flected the troubled state of the Altiplano economy rather than a 
significant expansion of jobs in Cochabamba. Employment in the 
manufacturing sector, which primarily consisted of small-scale 



87 



Bolivia: A Country Study 




National Capital 50 ^100 150 Kilom eters 

Populated place 50 100 150 MHe 

Residents per square kilometer 



] 1.9 or less 10.0-19.9 



1 1 . * | 2.0-4.9 20.0 - 29.9 

I | 5.0 - 9.9 | I 30.0 or more 



Source: Based on information from Bolivia, Instituto Geografico Militar, Atlas de Bolivia, 
Barcelona, 1985, 201. 



Figure 7. Population Density, 1985 



88 



The Society and Its Environment 



establishments, remained steady at 16 percent of total employment 
between 1976 and 1986. Instead, most migrants found employ- 
ment in the service sector. 

Religion 

Roughly 95 percent of Bolivians professed Roman Catholicism; 
nonetheless, a much smaller portion participated actively. Religion 
was traditionally the domain of women. Men felt no obligation to 
attend church or to practice their religion. The absence of clergy 
in the rural areas fueled the development of an Andean folk- 
Catholicism among Indians. In the decades following the Second 
Vatican Council (1962-65), the church tried to make religion a 
more active force in social life. 

Roman Catholicism had its roots in the Spanish conquest; priests 
accompanied the first military expeditions. The church's organi- 
zation, personnel, and role in society were all defined early in the 
colonial era. Pope Julius III created the La Plata bishopric in 1552; 
this was followed by those of La Paz and Santa Cruz early in the 
seventeenth century. A plethora of religious orders — Franciscans, 
Mercedarians, Dominicans, and Jesuits were the most prominent — 
joined diocesan priests in the colonial ministry. The clergy were 
largely of European origin. The few mestizos who joined the ranks 
were usually admitted as lay brothers rather than priests. 

The patronato real (an agreement between the Catholic Church 
and the Spanish crown) gave the Spanish throne and, by exten- 
sion, the colonial authorities significant powers in church affairs. 
Appointments of clergy and bishops normally required the approval 
of civil authorities. The relationship between church and state was 
mutual and intimate; each institution had great influence on the 
other's affairs. In a society where separation from the religious 
ministrations of the church was unthinkable, the church had great 
moral influence. 

In addition, the colonial church was an extremely wealthy insti- 
tution. Religious organizations not only owned extensive tracts of 
land but also served as quasi-official moneylenders to the landed 
elite and high-ranking officeholders. By the end of the colonial era, 
a combination of money lending and shrewd real estate investments 
had made the church the dominant financial power in Bolivia. 

Independence brought some changes to Bolivian church-state 
relations. The Roman Catholic Church retained its status as the 
nation's sole religion. Except for a brief period during the 1870s, 
this pattern continued throughout the nineteenth century. At the 
same time, however, the new Bolivian government quickly asserted 
its primacy over the church. In 1826 President Antonio Jose de 



89 



Bolivia: A Country Study 



Sucre Alcala (1825-28) took control over the collection of church 
tithes, closed all monasteries with fewer than twelve persons, and 
seized church lands. These actions permanently weakened the 
church as a political force. 

Further changes occurred in the twentieth century. In 1906 the 
government proclaimed religious toleration and permitted the es- 
tablishment of non-Roman Catholic churches. In 1961 the govern- 
ment relinquished its right under the patronato national (the successor 
to the patronato real) to mediate in church affairs. No longer could 
the government have a voice in conciliar decrees, briefs, or bulls 
that the pope issued or play a role in the selection of high-ranking 
church officials. The Constitution of 1967 grants official status to 
the Roman Catholic Church but also guarantees the public exer- 
cise of all other religions. 

Freed from direct government control, the Roman Catholic 
Church in the 1960s attempted to establish a more visible presence 
in Bolivian society. The country's bishops, organized into the 
Bolivian Bishops Conference (Conferencia Episcopal Boliviana — 
CEB), issued pastoral letters condemning the living conditions 
of peasants and workers. The bishops established development 
centers, research organizations, and commissions to address these 
problems. Many priests, brothers, and sisters took a more direct 
political stance. The so-called miner priests — oblates assigned to 
parishes in mining communities — actively defended workers' rights. 
This experience led to the formation in 1968 of Church and Soci- 
ety in Latin America-Bolivia (Iglesia y Sociedad en America Latina- 
Bolivia — ISAL-Bolivia). Employing a Marxist analysis of society, 
ISAL-Bolivia endorsed socialism as the only means of achieving 
justice. 

The political stance of ISAL-Bolivia and others engendered a 
sharp response from the bishops. Shortly after ISAL-Bolivia con- 
tended that capitalism had contaminated the church, the CEB 
stripped the organization of its official Catholic status. In a subse- 
quent pastoral letter, the bishops stated that although priests had 
an obligation to promote needed social change, they could not iden- 
tify with specific political parties or movements. The church hier- 
archy's caution was evident in its handling of the Bolivian Justice 
and Peace Commission. Established in 1973 as a research arm of 
the episcopate, the commission quickly became active in defend- 
ing the rights of political prisoners of the military government led 
by Colonel Hugo Banzer Suarez. The government accused the com- 
mission of promoting subversive propaganda and deported the or- 
ganization's key personnel. In their response, the bishops endorsed 
the commission's human rights agenda but then suspended its 

90 



A church in Potosi 
Courtesy Inter-American 
Foundation 



n Aymara woman praying 
Courtesy Inter-American 
Foundation 




91 



Bolivia: A Country Study 

operations for two years. The reconstituted commission operated 
under tighter episcopal controls than did its predecessor. 

The return of democracy in the 1980s presented the church with 
a new set of challenges. Although the CEB recognized that the 
economic crisis of the early and mid-1980s required strong mea- 
sures, it publicly questioned the wisdom of the stabilization poli- 
cies adopted in 1985 by President Victor Paz Estenssoro. Endorsing 
the position adopted at the Latin American Bishops Conference 
in Puebla, Mexico, in 1979, the CEB suggested that Paz Estens- 
soro 's New Economic Policy (Nueva Politica Economica — NPE) 
would generate increasing levels of inequality in society. The bishops 
followed up this pastoral letter by mediating negotiations in 1986 
between the government and the Bolivian Labor Federation (Cen- 
tral Obrera Boliviana — COB; see Political Forces and Interest 
Groups, ch. 4). 

In 1986 the Roman Catholic Church was organized into four 
archdioceses (La Paz, Santa Cruz, Cochabamba, and Sucre), four 
dioceses, two territorial prelatures, and six apostolic vicariates. The 
bishops had at their disposal approximately 750 priests, most of 
whom were foreigners. The paucity of priests significantly ham- 
pered church activities. For example, the archdiocese of Sucre only 
had sixty-two priests to attend to the needs of an estimated 532,000 
Catholics dispersed over 50,000 square kilometers. 

Because of the church's weak rural presence, the vast majority 
of Indians followed their own brand of folk-Catholicism far removed 
from orthodoxy. Indians saw no inconsistency in mixing modern 
technology and medicine with folk curers or indigenous ritual with 
professed Roman Catholicism. Indigenous rituals and fragments 
of Roman Catholic worship were interwoven in the elaborate fiestas 
that were the focus of social life. 

The Quechua and Aymara pantheon was a mix of Christian and 
pre-conquest spirits and beings. A deity like the virginal daughter 
of the Inca sun god was transmuted into a Christian figure, in this 
case the Virgin Mary. Many of the supernaturals were linked to 
a specific place, such as lake and mountain spirits. The earth mother, 
Pachamama, and fertility rituals played a prominent role. 

In the 1980s, Mormons, Jehovah's Witnesses, Seventh-Day Ad- 
ventists, and members of a variety of Pentecostal denominations 
gained increasing numbers of adherents among the rural and urban 
squatter populations. Because these denominations tended to em- 
phasize individual salvation and to deemphasize social and politi- 
cal issues, many leftists charged that they were agents of the United 
States government. In May 1989, left-wing terrorists murdered two 
Mormon missionaries from the United States who had been working 



92 



The Society and Its Environment 



in a squatter community near La Paz (see Subversive Groups, 
eh. 5). 

Other denominations represented in Bolivia included Methodists 
and Mennonites. The Bahai faith had members in over 5,500 lo- 
calities. Bolivia also had a small Jewish community, which had not 
reported any discrimination. In 1988 the government stated that 
numerous religious groups were operating in Bolivia illegally, but 
its attempt to expel some foreign members of the Hari Krishna 
sect in 1986 was overturned by the Supreme Court of Justice. 

Education 

Chronic political instability hindered the development of general 
education throughout Bolivia's history. In the colonial era, edu- 
cation was limited to a few clergy acting as tutors for the sons of 
elite families. Little effort was made to teach the Indians beyond 
the bare necessity to convert them. Independence brought a series 
of ambitious decrees calling for universal, compulsory primary edu- 
cation and a public school system; nonetheless, little was accom- 
plished. By 1900 schools existed primarily to serve urban elites. 
No vocational or agricultural institutes existed in the country. Only 
17 percent of the adult population was literate. 

A teaching mission from Belgium arrived in the early 1900s and, 
over a thirty-year period, established a foundation for rural primary 
education. In 1931 Elizardo Perez founded a large nuclear school 
(a central school with five to eight grades) near Lake Titicaca. 
Smaller satellite schools in nearby settlements supplemented the 
nuclear school's offerings. This arrangement became the prototype 
for rural education in the Andes. 

Overall, however, little real expansion of educational opportu- 
nities occurred. A 1947 law calling for an end to illiteracy drew 
attention to the government's limited capacity for action in this 
area. It required that every literate Bolivian teach at least one other 
to read and write and levied fines for adult illiteracy. On the eve 
of the 1952 Revolution, less than one-third of the adult population 
was literate. 

Legislation in 1956 laid the foundation for the public educa- 
tion system in force in the late 1980s. The government established 
a six-year primary cycle followed by four years of intermediate 
schooling and two years of secondary school ending with the bac- 
calaureate degree. Laws in 1969 and 1973 revised the curricula 
and instituted a five-year primary cycle, theoretically compulsory 
between the ages of seven and fourteen, followed by three years 
of intermediate school and four years of secondary education. The 
first two years of secondary instruction consisted of an integrated 



93 



Bolivia: A Country Study 

program that all students followed; the second two-year cycle per- 
mitted students to specialize in the humanities or one of several 
technical fields. All courses led to the baccalaureate degree, which 
was a prerequisite for entering the university. 

Higher education consisted of the University of Bolivia and a 
variety of public and private institutes. The University of Bolivia — a 
consortium of eight public universities and one private university 
(the 1 ,500-student Bolivian Catholic University) — was the only post- 
secondary school that awarded degrees. At least four other private 
institutions were operating without legal authorization in 1989. 
Other schools offered technical training in the fine arts, commer- 
cial arts, and technical fields, as well as in teacher training. 

The University of Bolivia, which enrolled more than 100,000 
students in 1989, was embroiled in a bitter conflict with the Paz 
Estenssoro government over what academic leaders feared were 
government plans to make drastic cuts in publicly financed higher 
education. The government acknowledged its plans to promote pri- 
vate institutions in an attempt to reverse a general decline in aca- 
demic standards resulting from wide-open admission policies. The 
impasse over university finances led to student protests in 1988, 
with police intervening in the country's largest university, the 37,000- 
student San Andres University in La Paz. 

The Ministry of Education and Culture organized adult litera- 
cy classes. By the mid-1980s, approximately 350 centers and more 
than 2,000 teachers were dedicated to adult literacy programs. More 
than half were in the department of La Paz, where less than one- 
third of the population lived. The program had little impact, 
however; improvements in the adult literacy rate, which stood at 
75 percent in the mid-1980s, primarily resulted from increased 
primary school enrollment. From 1973 to 1987, the percentage of 
school-aged children enrolled in primary schools climbed from 76 
to 87 percent (see table 4, Appendix). 

Most educational expenditures went for operating budgets, es- 
pecially personnel costs, leaving little for capital programs and ex- 
pansion. Spending remained skewed in favor of the urban areas. 
Approximately 60 percent of Bolivia's 59,000 teachers were em- 
ployed in urban schools. The economic crisis that beset the coun- 
try in the early to mid-1980s had a severe impact on educational 
spending. Analysts estimated that real education expenditures in 
1985 were less than 40 percent of the total recorded in 1980. Over 
the same period, the percentage of the gross domestic product 
(GDP — see Glossary) devoted to education dropped from 3 per- 
cent to less than 2 percent. 



94 




An Aymara woman 
participating in informal 
education training 
Courtesy Inter-American 
Foundation (Kevin Healy) 



A literacy class in the 
El Alto section of La Paz 
Courtesy Inter-American 
Foundation (Kevin Healy) 



Although the education system recorded some progress in enroll- 
ments in the 1970s and 1980s, serious problems remained. The num- 
ber of secondary school students grew twice as fast as the population 
of that age-group; the university student population grew more than 
four times faster than the total population of eighteen- to twenty- 
four-year olds. Still, secondary education remained beyond the grasp 
of most Bolivians; only 35 percent of the eligible age- group attended 
secondary school. Significant disparities also existed between male 
and female enrollment rates. Efforts to increase female attendance 
ran up against the harsh economic realities faced by poorer families 
who relied on their daughters' help with chores and child care. 

Dropout rates also remained extremely high. Only one-third of 
first graders completed the fifth grade, 20 percent started secon- 
dary school, 5 percent began their postsecondary studies, and just 
1 percent received a university degree. Dropout rates were higher 
among girls and rural children. Only about 40 percent of rural 
youngsters continued their education beyond the third grade. 



95 



Bolivia: A Country Study 

Finally, Quechua- and Aymara- speaking children faced special 
problems. Bolivia had no national program of bilingual education. 
There were a few moderately successful pilot programs; in addi- 
tion, Indian teachers often translated lessons while instructing their 
classes. In general, however, Spanish was the language of instruc- 
tion at every level. Critics blamed the absence of bilingual educa- 
tion for the high dropout rates among rural Indian schoolchildren. 

Health and Social Security 

From the mid-1970s to the mid-1980s, Bolivia made slow but 
steady progress in improving the health conditions of its popula- 
tion. Life expectancy rose from forty- seven years in 1975 to nearly 
fifty-one years in 1985. During the same period, the mortality rate 
dropped from 18.4 to 15.9 per 1,000 population, while the infant 
mortality rate dropped from 147.3 to 124.4 per 1,000 live births. 
The mortality rate in children one to four years of age dropped 
from 14.6 per 1,000 population in 1975 to 10.9 per 1,000 by 1980. 
Despite these improvements, however, in the mid-1980s Bolivia's 
health indicators were among the worst in the Western Hemisphere. 
Its life expectancy was the lowest in the Western Hemisphere, and 
its infant mortality rate was third after that of Peru and Haiti. An 
estimated 70 percent of the population suffered nutritional defi- 
ciencies. Only 43 percent had access to a safe water supply. Barely 
24 percent could avail themselves of adequate sanitary facilities. 

Health conditions varied significantly across regions and, within 
regions, by urban or rural residence. For example, disaggregated 
infant and childhood mortality rates for the mid-1970s revealed 
significant regional and urban/rural disparities (see table 5, Ap- 
pendix). Infants in the rural parts of the Altiplano, valleys, and 
Yungas had a far greater probability of dying than those in the 
urban lowlands. Mortality rates for children up to the age of five 
in the departments of Potosi and Chuquisaca were nearly double 
those found in the departments of Santa Cruz and Beni. Analysts 
also noted disparities in rates among ethnic groups. Rates were 
highest among children of mothers who spoke only an indigenous 
language, intermediate among bilingual mothers, and lowest among 
monolingual Spanish-speaking mothers. 

Gastrointestinal diseases, measles, and respiratory infections 
caused 80 percent of infant mortality. An ambitious vaccination 
program in the early 1980s brought a significant decline in the num- 
ber of cases of poliomyelitis, whooping cough, tetanus, and measles. 
The number of cases of diphtheria climbed, however, during the 
early 1980s. 



96 



The Society and Its Environment 



Bolivian health specialists also confronted a variety of diseases 
that affected the general population. A national survey in the early 
1980s revealed the presence of the vector responsible for Chagas' 
disease in the homes of 26 percent of the population. The number 
of cases of malaria — primarily found in Beni, Santa Cruz, Tarija, 
and Chuquisaca departments — rose from 9,800 in 1981 to 16,400 
in 1984. In 1984 the government organized a mass campaign in 
an effort to deal with a malaria epidemic in Beni Department. In 
1983 the government also organized a major yellow fever vaccina- 
tion program; the number of cases of jungle yellow fever declined 
from 102 in 1981 to 5 in 1984. Pulmonary tuberculosis remained 
a serious concern; over 9,400 cases were reported in 1981. In ad- 
dition, during the 1970s over 360 miners per year died from sili- 
cosis. Finally, as of 1987 Bolivia reported six cases of acquired 
immune deficiency syndrome (AIDS). 

In the mid-1980s, the government was restructuring its health 
care system to allow for a more effective delivery of services. 
Bolivia's health network traditionally had been characterized by 
a high degree of fragmentation and duplication of services. Although 
the Ministry of Social Services and Public Health had overall 
responsibility for the system, ten separate social security funds 
offered health services to members insured through their place of 
employment. In addition to wasting scarce resources, this approach 
had a heavy urban bias. The new approach called for a unified 
system under the control of the Ministry of Social Services and 
Public Health, with emphasis on preventive rather than curative 
medicine. 

The total fertility rate (the number of children a woman expected 
to bear during her reproductive life) was 6.0, and the crude birth 
rate (per 1,000 population) was 43 in the late 1980s. Both had 
declined but remained higher than those of neighboring countries. 
Fertility was highest among rural women, non-Spanish speakers, 
and women with little or no education. Roughly one-quarter of 
all married couples were using some form of family planning. 

Bolivia's booming cocaine industry was also spawning serious 
health problems for Bolivian youth. In the 1980s, Bolivia became 
a drug-consuming country, as well as a principal exporter of co- 
caine (see Narcotics Trafficking, ch. 5). Addiction to coca paste, 
a cocaine by-product in the form of a cigarette called pitillo, was 
spreading rapidly among city youths. Pitillos were abundandy avail- 
able in schools and at social gatherings. Other youths who worked 
as coca-leaf stompers (pisadores), dancing all night on kerosene and 
acid-soaked leaves, also commonly became addicted. The pitillo ad- 
dict suffered from serious physical and psychological side-effects 



97 



Bolivia: A Country Study 

caused by highly toxic impurities contained in the unrefined coca 
paste. Coca-paste addiction statistics were unavailable, and drug 
treatment centers were practically nonexistent. 

Social security coverage began in the early twentieth century 
when legislation created pension funds for teachers, the military, 
bank employees, and civil servants. The prototype for modern 
coverage came in the late 1940s and early 1950s with laws cover- 
ing such benefits as disability insurance, maternity care, medical 
care, pensions, and funeral benefits. The Social Security Code of 
1956 provided assistance for sickness, maternity, occupational risks, 
long- and short-term disability, pensions, and survivors' benefits. 

In the late 1980s, social security programs only covered roughly 
20 percent of the population (counting families of insured workers). 
Agricultural workers and the self-employed — a significant portion 
of the working class — were excluded. The percentage of the popu- 
lation covered was highest in the mining department of Oruro (43 
percent) and lowest in the departments of eastern Bolivia. 

Worker and employer contributions financed most benefits. 
Taxes provided additional money for some of the smaller funds. 
Since the mid-1960s, retired workers in many industries had es- 
tablished complementary pension funds to help protect their retire- 
ment benefits from the effects of inflation. 

* * * 

The works of William E. Carter and those of Hans C. Buechler 
and Judith-Maria Buechler offer useful analyses of Aymara cul- 
ture. Harold C. Osborne's Indians of the Andes has a thorough, if 
dated, description of the Quechua and Aymara Indians. M.J. Hard- 
man's The Aymara Language in Its Social and Cultural Context and ar- 
ticles by Dwight B. Heath, William Leons, and Madeline Barbara 
Leons describe ethnic relations in postrevolutionary Bolivia. Tristan 
Piatt, Olivia Harris, and Inge Maria Harman all present detailed 
studies of contemporary community dynamics among Quechua 
speakers. Lesley Gill's Peasants, Entrepreneurs, and Social Change and 
Connie Weil's "Migration among Land Holdings by Bolivian 
Campesinos" both detail colonization of the eastern lowlands. The 
works of Doris E. Widerkehr and June Nash describe conditions 
among miners. Brooke Larson traces the evolution of agrarian so- 
ciety in the Cochabamba region between the sixteenth and 
nineteenth centuries in Colonialism and Agrarian Transformation in 
Bolivia. For analyses of the impact of the cocaine industry on rural 
society in Bolivia, Kevin Healy's "The Boom Within the Crisis" 
and "Coca, the State, and the Peasantry in Bolivia, 1982-1988" 
are informative. (For further information and complete citations, 
see Bibliography.) 



98 



Chapter 3. The Economy 




Symbolism on the front of the Great Idol of Tiwanaku 



BOLIVIA, A RICHLY ENDOWED country, contained a mostly 
poor population. Despite abundant and diverse metal and min- 
eral deposits, substantial hydrocarbon reserves, vast untapped fertile 
plains, dense virgin forests, and numerous swift rivers with great 
hydroelectric potential, the country's gross domestic product (GDP — 
see Glossary) in 1987 was only approximately US$4.35 billion. Its 
per capita income of US$640 made Bolivia the second poorest nation 
in South America after Guyana. The economy's slow development 
stemmed in part from the country's rugged and varied terrain, in- 
adequate infrastructure, lack of direct access to international mar- 
kets, and underpopulation. In addition, an endemic and debilitating 
political instability often corrupted and derailed the economic de- 
velopment process. 

Bolivia experienced two major revolutions in economic policy 
during the second half of the twentieth century, both of which were 
led by Victor Paz Estenssoro (1952-56, 1960-64, and 1985-89). 
In 1952 Paz Estenssoro' s Nationalist Revolutionary Movement rose 
to power and supplanted a political system dominated by the nar- 
row interests of three tin-mining families and a landed oligarchy. 
The Nationalist Revolutionary Movement attempted to reverse the 
gross inequities that had evolved under the previous order. The 
central economic tenets of the revolution were land reform, the na- 
tionalization of the tin mines, labor rights, and a leading role for 
the public sector. 

In the ensuing decades, however, Bolivia's public sector swelled 
far beyond the economy's ability to sustain it. Although external 
development financing reached an unprecedented level in the 1970s, 
it was sharply curtailed by the end of the decade. Servicing this 
debt severely strained the economy in the 1980s and contributed 
to a decline in total output of over 4 percent a year between 1980 
and 1986. Hyperinflation made the currency worthless by the 
mid-1980s. When Paz Estenssoro again assumed the presidency 
in 1985, he introduced a stabilization plan, backed by the Inter- 
national Monetary Fund (IMF — see Glossary), that was unmatched 
in its austerity and in its attempt to totally restructure a Latin 
American economy toward market mechanisms. 

Mining dominated the economy from colonial times until the 
1985 crash of the international tin market. Natural gas replaced 
tin and other minerals in the 1980s as the leading export and was 
the hub of future development strategies. Agriculture employed 



101 



Bolivia: A Country Study 

nearly half of the official labor force, and government policies 
favored increased diversification toward manufactured agricultural 
products. In the late 1980s, an underground economy based on 
contraband, coca production, and other commercial trading in the 
informal sector (see Glossary) also thrived. These unregistered activ- 
ities, employing two-thirds of the work force, totaled more than 
the official international trade. 

Bolivia's economic upheavals in the 1980s were costly to work- 
ers, producers, institutions, the national currency, and the econ- 
omy at large. Although a moderate recovery of 2 percent in real 
growth in 1987 and 3 percent in 1988 had begun, both medium- 
term challenges and long-term structural obstacles faced economic 
policymakers. Debt was particularly well managed but remained 
one of Latin America's highest on a per capita basis. Foreign in- 
vestment, an important component of the stabilization plan, had 
still not materialized, and political stability remained tenuous. In 
the late 1980s, many Bolivians remained skeptical of government, 
which they viewed as tied to a history of corruption, high salaries, 
and incompetence. 

Growth and Structure of the Economy 

The Spanish arrived in what is present-day Bolivia in 1532 and 
replaced an Inca economic system based on collective agriculture, 
the ayllu (see Glossary), and economic tributes to a socio-religious 
hierarchy with a system dominated by the conquistadors and the 
Spanish crown. They organized the Indians into an encomienda (see 
Glossary) system in which they again paid tributes, now to con- 
quistadors, and toiled in the silver mines of Potosi under a com- 
pulsory labor system called the mita (see Glossary). Through the 
exploitation of Indian labor, the Spanish by the mid- 1600s had con- 
verted Potosi into South America's most populated metropolis (see 
The Economy of Upper Peru, ch. 1). 

Independence in 1825 did little to improve the economic lot of 
Bolivia's Indian majority. Indeed, the already unfair distribution 
of land, a legacy of the encomienda system, was worsened when the 
government abolished the land tenure system of the Indian com- 
munities in 1866. The system that emerged was dominated by 
nearly feudal peonage rather than wage labor. 

By the late 1800s, the silver industry had suffered a sharp decline 
and was replaced by tin mining. The tin industry benefited from 
the new rail access linking the country's mines to Pacific Ocean 
ports for the first time. The rail access to ocean ports had become 
crucial to the Bolivian economy by the early 1880s because Chile 
had seized the country's outlets to the sea during the War of the 



102 



The Economy 



Pacific, 1879-83 (see From the War of the Pacific to the Chaco 
War, 1879-1935, ch. 1). 

Bolivia's tin industry boomed in the early twentieth century as 
the invention of the vacuum-packed tin can and the assembly of 
the automobile raised world demand for tin. By the end of World 
War I, the country was the world's second-leading producer, mining 
a fifth of global output. The unprecedented international demand 
for tin, the high concentrations of easily accessed tin in the new 
mines, low taxation, and cheap labor made the industry highly 
lucrative. The nation's tin industry and the economy at large 
became completely dominated during the 1920s by the Patino, 
Hochschild, and Aramayo tin-mining families, who, along with 
the lawyers who defended them, were collectively known as the 
rosea (see Glossary). The rosea dominated not only economic affairs 
but politics as well, and it constituted a formidable elite in con- 
junction with the landed oligarchy that had developed since 1866. 
This class contrasted sharply with most of the country's poor citi- 
zenry who worked the marginal agricultural plots of the highlands 
or labored under appalling conditions in underground tin mines. 

The Great Depression in 1929 and the devastating Chaco War 
(1932-35) with Paraguay marked the beginning of a period of grow- 
ing disdain for the country's elite. The Great Depression caused 
tin prices to plunge, thereby hardening the plight of miners and 
lowering the profits of the rosea. During the Chaco War, highland 
Indians were enlisted to defend Bolivia's vast Chaco lowlands, with 
its rumored oil reserves (see The Chaco War, ch. 1). The war ex- 
posed highlanders for the first time to their nation's vast tracts of 
land. As Indians and organized labor began to play a more promi- 
nent role in national life after the Chaco War, mining and landed 
interests could no longer stop the momentum for social, economic, 
and political reforms. 

The principal economic goals of the 1952 Revolution were land 
reform and the nationalization of the tin mines, both of which were 
swiftly enacted. Even before the Nationalist Revolutionary Move- 
ment (Movimiento Nationalista Revolucionario — MNR) could 
implement its Agrarian Reform Law on August 2, 1953, the long- 
oppressed Indians began to seize the latifundios. Two years into 
the reform program, the government accommodated 49 percent 
of all farming families who had claimed their traditional land. 

The state also expropriated underutilized arable land. On Octo- 
ber 31, 1952, the government nationalized most of the tin mines 
and legally transferred them to the Mining Corporation of Bolivia 
(Corporacion Minera de Bolivia — Comibol), which dominated 



103 



Bolivia: A Country Study 

mining activity until 1985. Much of the elite fled the country or 
resettled in the underpopulated department of Santa Cruz. 

The MNR's postrevolutionary economic policies focused on the 
public sector, especially Comibol and the Bolivian State Petrole- 
um Company (Yacimientos Petrolfferos Fiscales Bolivianos — 
YPFB), as the spearhead of economic growth. The MNR also 
promoted cooperatives, particularly in mining and agriculture, as 
an alternative to the latifundios. The government enacted social 
reforms, such as universal suffrage, and forged a greater role for 
organized labor in society. Although most of its economic policies 
were not conventional, the revolutionary government did accept 
a stabilization plan backed by the IMF in 1956 and 1957 in an 
effort to reverse negative growth and serious inflation. 

Economic growth averaged 4.5 percent from 1965 to 1980, lower 
than the growth rate in most Latin American economies. Miner- 
als still dominated the nation's economy, however; tin accounted 
for 40 percent of exports and 1 5 percent of government revenues 
as late as 1980. Natural gas and oil reduced that dependency some- 
what beginning in the early 1970s, but not enough to insulate the 
economy from commodity price swings. Protracted disputes be- 
tween the government and labor also characterized this period. 

Economic growth accelerated during the 1970s, averaging 5.5 
percent a year, one of the fastest rates of expansion in Bolivian 
history. This expansion resulted primarily from higher export com- 
modity prices. Large public sector spending also spurred economic 
output as external financing cushioned budget deficits. The brisk 
rise in output also occurred in part because of sharp restrictions 
on organized labor imposed by the military government of Hugo 
Banzer Suarez (1971-78). Political stability and higher commod- 
ity prices in turn favored greater foreign investment, which also 
improved national accounts. Moreover, the government announced 
large reserves of oil during the 1970s. Although revised downward 
years later, the oil discoveries improved Bolivia's creditworthiness 
with foreign commercial banks. 

The economic expansion of the 1970s also contributed to rapid 
growth of the Santa Cruz area. Partly because the government fa- 
vored that region, but also because of increased colonization, higher 
cotton and soybean prices, and infrastructure developments, the 
area flourished. For a time, the city of Santa Cruz threatened to 
overtake La Paz as the nation's most important financial center. 

By the 1980s, the public sector had ballooned to encompass 520 
agencies, including 120 federal agencies and 50 state-owned enter- 
prises or financial institutions. Comibol accounted for 65 percent 
of all mineral production, YPFB produced 80 percent of all oil and 



104 



The Economy 



natural gas, and the government owned over half of the banking 
system's assets. The government also controlled the manufacture 
of glass, textiles, cement, dairy products, oils, and sugar, mostly 
through the Bolivian Development Corporation (Corporacion 
Boliviana de Fomento — CBF), then the nation's principal develop- 
ment bank. Public sector corruption had become common, and 
certain government agencies increased their scope solely to expand 
their influence in the bureaucracy. 

Bolivia's minor "economic miracle" of the 1970s began to 
weaken in 1978 when political instability returned in force. Sev- 
eral foreign commercial banks reassessed Bolivia's ability to ser- 
vice its nearly US$3 billion debt, most of which had been acquired 
by the Banzer government. External financing from private sources 
came to a complete halt by the early 1980s; in the absence of ex- 
ternal financing to cover increasingly large budget deficits, the 
government opted for the inflationary policy of printing more 
money. The value of the peso dropped rapidly, and high interna- 
tional interest rates multiplied the debt. 

By 1985 the nation's per capita income had fallen below 1965 
levels, and rampant hyperinflation ravaged the Bolivian economy. 
Prices escalated so rapidly that inflation reached over 24,000 per- 
cent by 1985. Barter flourished as money was seen as virtually 
worthless. The coca and cocaine industry propped up the econ- 
omy and flooded the financial system with United States dollars. 
In order to restore public confidence in the national currency, the 
Hernan Siles Zuazo government (1982-85) announced a "dedol- 
larization" decree that outlawed the dollar deposits and loans used 
by 90 percent of the economy. The policy caused massive capital 
flight, burdened the banking system by forcing it to convert into 
greatly overvalued and essentially worthless pesos, and destroyed 
the nation's deposit base. From 1979 to 1985, successive Bolivian 
heads of state negotiated six tentative stabilization programs (paquetes 
economicos) with the IMF, but none was implemented because of 
the lack of political continuity and the strength of the political op- 
position (see Political Dynamics, ch. 4). 

In August 1985, President Paz Estenssoro promulgated Bolivia's 
New Economic Policy (Nueva Politica Economica — NPE). The 
NPE's main feature was the floating of the peso with the United 
States dollar (see Monetary and Exchange Rate Policies, this ch.). 
The plan also liberalized import policies by introducing a uniform 
tariff of 20 percent. In addition, the NPE called for a radical re- 
structuring of the public sector, including the dismantling of the 
CBF, the laying off of 20,000 of Comibol's 27,000 employees, the 
partial privatization of the Mining Bank of Bolivia (Banco Minero 



105 



Bolivia: A Country Study 

de Bolivia — Bamin), the reduction by one-third of YPFB's work 
force, and a virtual spending freeze for all state-owned enterprises. 
The policy also deregulated the economy, legalized dollars, elimi- 
nated subsidies, and lifted price controls. Although drastic, the NPE 
succeeded in suffocating rampant hyperinflation; within a few 
months, inflation had dropped to an annual rate of 10 to 20 percent. 

The international tin market collapsed in October 1985, adding 
to Bolivia's problems with hyperinflation, recession, and austere 
stabilization. Declaring an end to the tin era, the government fur- 
ther encouraged the diversification and privatization of the econo- 
my. It also enacted a major tax reform measure in May 1986 that 
lowered the country's highest tax bracket from 30 to 10 percent 
and simultaneously instituted a general value-added tax (VAT — 
see Glossary). Economists generally perceived the 1986 tax reform 
as an important policy tool in continuing to stabilize the economy. 

The crash of the tin market and the NPE's austerity program 
led to an estimated unemployment rate of 21.5 percent by 1987 
(the unemployment rate had risen steadily from 5.5 percent in 1978 
to 10.9 percent in 1982, 15.5 percent in 1984, and 20 percent in 
1986.) In response, the government promulgated the Reactivation 
Decree in July 1987. Under the decree, the government created 
the Emergency Social Fund — financed in part by West European 
and Latin American governments as well as the World Bank (see 
Glossary) — to develop public works projects to activate the unem- 
ployed. The decree also fostered export activity by introducing tax 
rebates for exporters and by establishing the National Institute for 
Export Promotion. In addition, the 1987 reactivation measures in- 
cluded sophisticated financing schemes aimed at eliminating the 
country's debt with commercial banks (see Balance of Payments; 
Debt, this ch.). 

Economic Policy 
Fiscal Policy 

Bolivia's fiscal policies in the 1970s contributed to the hyper- 
inflation of the early 1980s. Fiscal deficits grew as the public sec- 
tor took advantage of windfalls from high commodity prices, easy 
access to deficit financing in international markets, and robust eco- 
nomic growth to increase its activities. As external financing slowed 
in 1978 and debt payments outgrew new financing, budget deficits 
began to directly influence the economy. With the onset of the inter- 
national recession of 1982, the economy began an inflationary spiral 
both caused and accelerated in large part by fiscal mismanagement. 
Because Bolivia had no bond market in the early 1980s and lacked 



106 



The Economy 



external financing, fiscal deficits could be paid for only by the highly 
inflationary practice of printing more money. Combined with a 
series of other trends in the economy, inflation and deficits fueled 
more of the same. As hyperinflation raged in 1984 and 1985, 
government revenues as a percentage of GDP dropped to as low 
as 1 percent. Tax rates, most of which were not indexed, became 
completely distorted; even worse, by the time the government 
received the revenues, they were virtually worthless. 

NPE reforms drastically affected fiscal policy on both the expen- 
diture and the revenue sides. In an effort to reduce government 
spending, the government liquidated the CBF and restructured the 
two largest and most costly state-owned operations, Comibol and 
YPFB. It also imposed spending controls on the public sector and 
froze its wages. On the revenue side, it unified import tariffs and 
hired a Swiss company to collect import receipts. The government 
raised the price of oil by a factor of ten, which immediately con- 
tributed badly needed revenue. In 1986 the government also 
adopted an aggressive policy toward tax collections, with drama- 
tic results. The public sector deficit dropped from 28 percent of 
GDP in 1984 to 3.8 percent in 1986. Deficits increased to 10.5 per- 
cent in 1987 because of Argentina's failure to make its payments 
for natural gas but again fell to 6 percent by 1988. 

Expenditures 

As a result of the profound changes in fiscal policy during the 
late 1980s, government spending was greatly curtailed and was 
directly budgeted according to projected revenues and external 
financing. Moreover, government expenditures, including systemic 
review processes for investment, became more responsible and tar- 
geted. In 1987 public sector expenditures equaled about 30 per- 
cent of GDP, and the budget deficit of nearly 11 percent was 
financed almost completely with official external finance. The bud- 
get was typically divided into four spending components: central 
government, financial and nonfinancial state-owned enterprises, 
departmental budgets, and municipalities. Over 60 percent of ex- 
penditures went toward government salaries and debt payments. 
Debt payments, which were as high as 30 to 40 percent of expen- 
ditures in the early 1980s, were below 20 percent by the late 1980s 
because of the rescheduling of Bolivia's debt terms. Capital expen- 
ditures had reached dangerously low levels as a consequence of the 
fiscal crisis. Although budgeted at 13 percent of GDP in 1987, actual 
capital expenditures were approximately 5 percent of GDP, indicat- 
ing that long-term development projects lacked financing. Over 



107 



Bolivia: A Country Study 



half of all government capital expenditure in the 1987-90 fiscal plan 
was destined for investment in transportation and hydrocarbons. 

Revenues 

Until the mid-1980s, two state agencies, Comibol and YPFB, 
accounted for the overwhelming share of government revenues. 
Besides tin and hydrocarbons, few domestic taxes, such as income 
taxes or sales taxes, contributed to the national treasury. Tax eva- 
sion was widespread, and many businesses were reputed to main- 
tain two sets of accounting books, one authentic and one for 
government tax collectors. Furthermore, the tax system was ex- 
tremely complex and involved thousands of different taxes that fre- 
quently skewed incentives for producers. 

The adoption of a comprehensive tax reform package in May 
1986 signaled a radical change in government revenue policy. The 
government established the Ministry of Taxation, computerized 
the tax system, collected taxes aggressively, and made jail sentences 
compulsory for evasion and fraud. In great contrast to the previ- 
ous tax schedule, the 1986 package established only six taxes. The 
crux of the new tax system was a 10 percent VAT on the produc- 
tion of all goods and services. The VAT was accompanied by a 
complementary tax, which essentially functioned as an income tax, 
exacting 10 percent of income, rents, royalties, dividends, and other 
sources of income. This cut the top income tax bracket from 30 
to 10 percent. The VAT tax, however, was deductible from the 
income tax, and with both taxes equal to 10 percent, there was 
little incentive to cheat on the other tax. On the contrary, after 
1985 the private sector's concern with receipts began to rectify the 
tax system. 

Monetary and Exchange Rate Policies 

The Central Bank (Banco Central) managed monetary policy 
and regulated the nation's financial system. Established in 1928, 
the Central Bank controlled the money supply, restrained infla- 
tion, regulated credit, issued currency, and auctioned foreign ex- 
change. In 1985, however, the Central Bank helped to create 
hyperinflation as it circulated unprecedented quantities of pesos. 
Hyperinflation ravaged the financial sector, virtually wiping out 
the country's deposit base and leaving many of the country's fi- 
nancial institutions insolvent by the end of the 1980s. Under Paz 
Estenssoro's leadership, the Central Bank deregulated the finan- 
cial sector beginning in 1985 by legalizing deposits in United States 
dollars, freeing up interest rates, and adjusting reserve ratio re- 
quirements. In the late 1980s, the Central Bank's activities focused 

108 



The Economy 



on keeping inflation in check, improving the financial viability of 
government banks and enterprises, and resuscitating and improv- 
ing the ailing commercial banking system. 

The peso, which replaced the boliviano in January 1963, was 
a stable currency until it was devalued in 1972 and remained at 
$b20 = US$1 throughout the 1970s. As the economy deteriorated 
in the early 1980s, the value of the peso slid drastically from 
$b25 = US$l in 1980-81 to $b64 = US$l in 1982, $b230 = US$l 
in 1983, $b2,178 = US$1 in 1984, and finaUy $b75,000 = US$1 by 
1985. That rate, however, was the enormously overvalued official 
rate; the black market demanded a rate of over $bl million = US$1 . 

The NPE's decision to float the peso against the dollar caused 
an immediate devaluation to $bl .5 million = US$1 in August 1985. 
Furthermore, the black market was legalized as the government 
expected to keep the national currency at market rates. In Janu- 
ary 1987, the new boliviano replaced the peso as the official cur- 
rency. The new currency effectively slashed off the last six zeros 
of the old peso to redress the damage done to the currency by 
hyperinflation. By 1988 the currency was relatively stable at 
B2.3 = US$1, and the difference between the official rate and the 
black market, or parallel rate, did not exceed 1 percent. The float- 
ing of the boliviano was administered by the Central Bank, whose 
Committee for Exchange and Reserves held a daily auction of for- 
eign exchange called the bolsi'n. The new system also removed all 
taxes and commissions on the purchase of foreign exchange. 

Exchange rate policies were an important element in Paz Estens- 
soro's stabilization and reactivation policies. The initially drastic 
devaluation of the peso in 1985 helped restore confidence in the 
national currency after it had lost most of its value. The stabilized 
currency and the end of speculation were leading factors in the over- 
all economic stability that emerged after 1985. On the one hand, 
the lower exchange rate constrained imports by making them more 
expensive, which hurt the poor and the manufacturers the most; 
on the other hand, the exchange rate functioned as an incentive 
for exporters, whose products became cheaper and more competi- 
tive in international markets. Although nontraditional exports 
responded positively and helped to reactivate the economy, lower 
prices for natural gas and tin prevented the floating exchange rate 
policy from improving the country's balance of payments, at least 
in the late 1980s (see Foreign Trade, this ch.). 

Labor 

Formal Sector 

Bolivia's official labor force reached 1.6 million in 1986, roughly 



109 



Bolivia: A Country Study 

half of the economically active population or about a quarter of 
the total population. Labor statistics varied widely because of 
methodological reasons and because of the large role of the infor- 
mal economy, which contained both legal and illegal components 
(see Informal Sector, this ch.). Men made up approximately 75 
percent of the official labor force and 64 percent of the economi- 
cally active population. In actuality, however, women played a 
greater role than suggested by official statistics, particularly in rural 
areas and in the urban informal sector. During the 1980s, the 
growth rate of the female labor force was nearly double that of 
males. The labor force as a whole grew 2.7 percent annually in 
the 1980s. In the late 1980s, nearly half of all workers were in 
agriculture (46 percent), followed by services (34 percent) and in- 
dustry (20 percent). Although services had grown since 1950 at 
the expense of agriculture, Bolivia still contained the second most 
agricultural economy in South America in the late 1980s, behind 
Paraguay, and the second least industrial economy, after Peru. The 
nation's unemployment rate, which averaged just under 6 percent 
during the 1970s, climbed to 10.9 percent in 1982, 13 percent in 
1983, 15.5 percent in 1984, and 18 percent in 1986. It was esti- 
mated at 21.5 percent in 1987. Unemployment in the highlands 
tended to be about double that of the eastern plains (llanos) or 
lowlands (Oriente). 

Workers were concentrated in the cities of La Paz (40 percent), 
Santa Cruz (20 percent), and Cochabamba (20 percent). Salaries 
varied considerably by location and sector. Urban incomes were 
much greater than those in rural areas, and the lowest official 
salaries occurred in the southern highlands. Workers in the bank- 
ing and hydrocarbon sectors were among the best paid, whereas 
those in mining, education, and services received among the lowest 
wages, depending on shifts in the economy and wage negotiations. 
The average real wage declined throughout the economy during 
the 1980s. Skilled and semiskilled labor was scarce, and inadequate 
training persisted. 

Organized labor had been the most important interest group in 
the Bolivian economy since 1952. The country's labor unions were 
some of the strongest in Latin America and were characterized by 
their activism, militancy, discipline, violence, and political in- 
fluence. One knowledgeable analyst estimated that Bolivia had as 
many labor strikes, protests, and demonstrations in proportion to 
its population as any country in the world. The Bolivian Labor 
Federation (Central Obrera Boliviana — COB), an umbrella organi- 
zation for the country's more than 150,000 union members, domi- 
nated the nation's labor unions. The COB routinely mobilized 



110 




Labor marchers in La Paz 
Building a sheep-breeding facility at Lake Titicaca 
Courtesy Inter-American Foundation (Kevin Healy) 



111 



Bolivia: A Country Study 

member unions to stage roadblocks, marches, hunger strikes, 
demonstrations, and work stoppages over wage demands, work- 
ing conditions, political issues, and job benefits. The COB's most 
powerful affiliate was traditionally the Trade Union Federation of 
Bolivian Mineworkers (Federacion Sindical de Trabajadores 
Mineros de Bolivia — FSTMB). Despite the power of organized 
labor in the mining industry, working conditions in the mines re- 
mained deplorable, and the average miner died of silicosis after 
ten years of working underground. 

NPE policies, particularly the Comibol layoffs, weakened the 
FSTMB. As a result, the General Trade Union Confederation of 
Peasant Workers of Bolivia (Confederation Sindical Unica de 
Trabajadores Campesinos de Bolivia — CSUTCB) was challenging 
the FSTMB 's traditional dominance in the late 1980s. Approxi- 
mately 90 percent of all small farmers were members of organiza- 
tions affiliated with the CSUTCB. The Tupac Katari National 
Federation of Bolivian Peasant Women (Federacion Nacional de 
Mujeres Campesinas de Bolivia Tupac Katari) was also widespread 
(see Political Forces and Interest Groups, ch. 4). Most nonunionized 
labor was in the informal sector. 

Informal Sector 

Definitions of Bolivia's informal sector varied in the late 1980s 
but generally included nonprofessional, self-employed, unpaid family 
workers, domestic servants, and businesses with five or fewer em- 
ployees. Although primarily associated with La Paz, the informal 
sector also included a rural component and an illegal component 
linked to the coca industry. The urban and legal informal sector 
was estimated to contribute about 1 2 percent of GDP and employ 
as much as 60 percent of the labor force in the mid-1980s. Most 
analysts believed that the sector increased in the late 1980s because 
of public sector layoffs and the depressed mining industry. 

The informal sector was characterized by ease of entry, the family 
nature of work, the informal uses of credit, and the evasion of cer- 
tain government regulations, especially regarding the sale of smug- 
gled goods. Two household surveys of La Paz in the 1980s found 
that the income of small proprietors in the informal sector aver- 
aged as much as twelve times the minimum wage (which was 
equivalent to US$425 per month in 1988); the income of the self- 
employed, who made up about half of the informal sector, was twice 
the minimum wage. By contrast, salaried workers, unpaid family 
workers, and domestic servants typically made only one-half of the 
minimum wage. Workers in the informal sector, however, generally 



112 



The Economy 



endured the recession of the 1980s better than their formal sector 
counterparts, and there was a trend toward a convergence of in- 
comes. 

The most lucrative informal activity was in transportation, usu- 
ally unregistered buses or taxis. Other informal services included 
laundry, mechanical repair, electrical services, black market cur- 
rency transactions, and money lending. The most common activities 
were makeshift family grocery stores and the sale of food, cloth- 
ing, and smuggled consumer items. Seamstresses, weavers, car- 
penters, and butchers performed the bulk of informal industrial 
work. The government's VAT was in part aimed at netting more 
revenues from small producers who remained outside government 
regulation. 

Agriculture 

Agriculture's role in the economy in the late 1980s expanded 
as the collapse of the tin industry forced the country to diversify 
its productive and export base. Agricultural production as a share 
of GDP was approximately 23 percent in 1987, compared with 30 
percent in 1960 and a low of just under 17 percent in 1979 (see 
fig. 8). The recession of the 1980s and unfavorable weather condi- 
tions, particularly droughts and floods, however, hampered out- 
put. Agriculture employed about 46 percent of the country's labor 
force in 1987. Most production, with the exception of coca, focused 
on the domestic market and self-sufficiency in food. Agricultural 
exports accounted for only about 1 5 percent of total exports in the 
late 1980s, depending on weather conditions and commodity prices 
for agricultural goods, hydrocarbons, and minerals. 

Like the economy at large, agriculture faced major structural 
obstacles that kept it from reaching its vast potential. The lack of 
roads and easy access to ports hindered farmers from getting their 
produce to domestic markets and to the export markets that pro- 
vided the most potential for the sector's growth. A lack of credit 
for farmers was another long-standing problem, caused by govern- 
ment policies, the use of credit for political ends, and the strict lend- 
ing procedures of the commercial banking sector. Bolivia also 
suffered from the worst farming technology in South America and 
an insufficient network of research and extension institutions to 
reverse that trend. The combined lack of infrastructure and tech- 
nology made farmers vulnerable to almost yearly droughts and 
floods. The traditional use of pricing policies ensuring lower food 
prices for urban residents also lessened incentives for farmers. In 
addition, farmers increasingly had to compete with contraband 
imports in a wide range of agricultural products. Beyond these 



113 



Bolivia: A Country Study 



FY 1987 -GDP US$4.35 billion 

Electricity, gas, and water 




Source: Based on information from Gary C. Groves, "Bolivia: Agricultural Situation 
Report," Washington, March 30, 1988, 19. 

Figure 8. Gross Domestic Product (GDP) by Sector, FY 1987 

specific obstacles, agriculture, like all sectors of the economy, also 
suffered from the country's periodic political instability, economic 
mismanagement, and slow economic growth. 

Land Tenure 

Before the 1952 Revolution, Bolivia's land distribution was the 
worst in Latin America; some 4 percent of all landowners possessed 
more than 82 percent of the land. A major success of the land re- 
form program was the redistribution of nearly 50 percent of peasant 
lands within its first two years. Although greatly improved from 
the prerevolutionary period, broad disparities in land tenure re- 
mained in the 1980s. Analysts estimated that over 90 percent of 
the farms in the highlands and valleys remained under twenty hect- 
ares in the 1980s. These farms typically were one to three hectares 
in size and were worked by nearly 80 percent of Bolivia's more 



114 



The Economy 



than 700,000 farmers. The majority of farmers in the highlands 
were also members of agricultural cooperatives. Only 40 percent 
of the farms in the eastern and northern lowlands were under twenty 
hectares; the most common size in that region was fifty to seventy- 
five hectares, but subsistence farming existed as well. 

Nearly 60 percent of all farmers lived in the highlands in the 
late 1980s. Highland parcels were the smallest in the country, had 
the least fertile soils, and had been worked for the longest period 
of time. Highland farmers received under 40 percent of all rural 
income, although they represented about 60 percent of the rural 
population. 

Twenty percent of the country's farmers were located in the rela- 
tively fertile valleys. These farmers fared much better than their 
counterparts on the high plateau (Altiplano) between the two moun- 
tain ranges in western Bolivia. Plots averaged between five and 
ten hectares, and because of the more fertile and less exhausted 
soils, a larger share of that land was in use compared with the 
Altiplano. Farmers in the valleys were frequently able to harvest 
two crops annually, as opposed to the one crop a year on the 
Altiplano. 

The largest farms were found on the sprawling and often iso- 
lated eastern lowlands, where about 20 percent of the country's 
farmers worked 65 percent of the country's land. The lowlands 
produced the bulk of all agricultural output and virtually all of the 
sector's exports. Although about 16 percent of the lowland farms 
were of subsistence size (five hectares or fewer), the great majority 
of the region's land was owned by medium-to-large landowners 
actively engaged in commercial agriculture. The power center of 
the agricultural sector was located in the southeastern department 
of Santa Cruz, where landholdings often exceeded 5,000 hectares. 

Land Reform and Land Policy 

Bolivia's land reform policies of the early 1950s were implemented 
much more rapidly and completely than those of other Latin Ameri- 
can countries. The land reform essentially allowed peasants to claim 
the land that they had traditionally worked. For this reason, 
however, the size of many peasant plots did not increase as a result 
of the reform. 

In retrospect, land reform was more of a social success than an 
economic one. Although the reform improved income distribution, 
its main contribution was to transform a feudal society into a market 
society. Land reform has remained a goal of successive govern- 
ments since 1952, but the pace and scope of reform slowed. The 
original Agrarian Reform Law was amended in 1963 and 1968. 



115 



Bolivia: A Country Study 

By 1986 the government claimed to have redistributed 33 million 
hectares through the reform process. But although peasants ate 
better, agricultural production did not increase in the way most 
government officials expected. In addition, the reform process was 
hampered by price controls, a lack of extension services, inade- 
quate credit, insufficient infrastructure, and regional conflicts be- 
tween the highlands and lowlands. The growth of the agricultural 
sector was barely positive during the 1950s, and annual growth, 
especially among food crops, did not keep pace with population 
growth, thus requiring increased imports of foodstuffs. 

Land policy since 1952 also has been marked by the coloniza- 
tion of the lowlands. Although government policy has encouraged 
colonization of these isolated areas since the 1940s, the process did 
not accelerate until the 1950s, when a major highway connected 
Cochabamba with Santa Cruz and a rail system linked Santa Cruz 
with Sao Paulo, Brazil (see Transportation, this ch.). The settlers 
included members of the former ruling oligarchy who had lost land 
in the reform, as well as more risk-taking highlanders, or Kollas 
(see Glossary), who came as wage laborers or who bought land. 
In order to facilitate the colonization process, the government 
created the National Colonization Institute (Instituto Nacional de 
Colonization — INC), which typically helped highland families move 
to newly established government colonies, sometimes completely 
isolated from other towns. From 1952 to the mid-1970s, the govern- 
ment helped 46,000 families (190,000 people) colonize the lowlands. 
Government-sponsored colonization, however, accounted for just 
15 percent of all the pioneers who ventured east. Furthermore, INC 
colonies suffered a high dropout rate among participants, many 
of whom faulted the INC for providing insufficient support ser- 
vices and too few roads. Other settlers included members of North 
American Mennonite and Japanese communities who were estab- 
lishing colonies in neighboring Paraguay. 

Land policy and government agricultural policy in general shifted 
dramatically when orthodox economic policies were implemented 
in 1985. The government, which had once monopolized the produc- 
tion of many key crops, set prices, marketed goods, and closely 
controlled credit, now effectively withdrew from the sector. As a 
result, farmers in the late 1980s were in transition from a period 
characterized by import protection and close cooperation with the 
government to one of free competition with highly advanced inter- 
national markets and contraband. 

Land Use 

Bolivia contains slightly over 108 million hectares of land. Forest 
or woodland comprised 40 percent of all land, or 56 million hectares, 



116 



An adult education class in the Altiplano region 
Courtesy Inter-American Foundation (Jane Regan) 
An urban greenhouse on the outskirts of La Paz 
Courtesy Inter-American Foundation (Robin Bowman) 



117 



Bolivia: A Country Study 

in the late 1980s. Pasture accounted for a quarter of total land, 
or about 27 million hectares. Crops covered only 2 percent of all 
land, or over 1 million hectares. The remaining 30 percent of the 
land was destined for "other uses, ' ' including 8 percent of all land 
that was arable but not in use. Of the land deemed suitable for 
agricultural use, only about 10 percent was in use. 

As with land tenure, the country's land use was best explained 
in terms of its geography. Most highland farmers worked minifun- 
dios (see Glossary) plots of staples and vegetables, such as pota- 
toes, corn, haba (beans), and quinoa (a native cereal), selling only 
30 percent of their output. Produce usually was marketed to truck- 
ers, the most common marketing outlet for Bolivian farmers, or 
was sold at large agricultural fairs, an Inca custom. Although 
Indians in the highlands terraced their steep fields in the Inca style, 
traditional farming techniques also made farmers vulnerable to frost, 
irregular rainfall, and erosion. Farm animals plowed the soil, and 
the abundance of sheep, llamas, and alpacas, used as a form of 
insurance income against bad weather, made overgrazing common, 
thus further eroding the soil and lessening soil fertility. 

Farmers in the valleys used their farmland for a mixture of tradi- 
tional and nontraditional purposes, producing both food and cash 
crops. The primary food crops were tubers, barley, corn, wheat, 
fruits, and vegetables. Export crops such as cocoa, tea, and coffee 
were also grown, the latter because of the ideal altitude. Livestock 
activity also was common. Although yields were not always high, 
the valleys usually produced two crops a year and were less vul- 
nerable to weather fluctuations than on the Altiplano. Nevertheless, 
farmers in the valleys also relied on truckers for their marketing 
and suffered greater isolation than those on the Altiplano, particu- 
larly during the rainy season, October to April. Although farmers 
in the valleys took more risks than those on the Altiplano, they 
still suffered from a low technological level and the lack of direct 
access to markets. 

The country's most productive farmers were those who culti- 
vated the fertile plains of the lowlands, especially in the depart- 
ment of Santa Cruz. Santa Cruz's rise to prominence was the 
consequence of infrastructure improvements in the 1950s, land re- 
form, and colonization. By the 1960s, Santa Cruz was responsible 
for the import- substitution industrialization (see Glossary) of sugar, 
rice, cotton, and oilseeds. With the rapid increase in commodity 
prices in the early 1970s, cruceha (Santa Cruz region) lands were 
increasingly sown with cash crops, especially cotton and soybeans. 
For political reasons, Santa Cruz also received a disproportionate 
share of the sector's credit in the 1970s, which also accelerated 



118 



The Economy 



growth. In contrast to the rest of the country, farmers in Santa 
Cruz were actively engaged in all aspects of the market economy, 
such as harvesting, processing, marketing, and even research and 
development. These farmers were organized into powerful producer 
organizations that traditionally negotiated prices with the govern- 
ment and provided technical assistance to members. Small farm- 
ers also continued to occupy Santa Cruz; many were responsible 
for the growing problems of deforestation because of slash- and-burn 
approaches to rice farming. An estimated 100,000 landless wage 
earners in the agricultural sector cut sugarcane or picked cotton 
in Santa Cruz or performed seasonal labor in Argentina. 

The northern lowland departments of Pando and Beni were much 
more isolated than Santa Cruz, thus limiting their ability to be major 
agricultural producers. They were originally settled in the late 1800s 
during a boom in rubber exports from the Amazon region. As 
colonization proceeded, larger- scale commercial agriculture devel- 
oped in coffee, rice, and especially cattle. By the 1960s, large cat- 
de ranches of 500 hectares and more flourished in the Beni, making 
it the country's leading cattle producer. In the 1980s, Beni Depart- 
ment also became an important producer of commercial timber. 

Crops 

Food Crops 

Potatoes, the basic staple of highland Indians since pre-Inca 
times, remained the most important food crop in the late 1980s. 
In 1988 approximately 190,000 hectares, mostly in the highlands, 
produced 700,000 tons of potatoes (see table 6; table 7, Appen- 
dix). These figures compared unfavorably, however, with 1975, 
when 127,680 hectares provided 834,000 tons of potatoes, indicating 
that yields were dwindling. Bolivia was generally self-sufficient in 
potatoes (over 200 varieties were grown), but imports were needed 
during occasional periods of drought or freezing. Bolivia also ex- 
ported some of its harvest to Brazil. The lack of new seed varie- 
ties, chemical fertilizers, and irrigation systems, together with the 
continued exhaustion of the highland soils, was responsible for the 
low yields. In the late 1980s, the lack of financial credit at plant- 
ing time represented the greatest impediment facing potato growers. 

Corn was the second major food crop, and its importance was 
growing. Corn covered more hectares than any other crop. In the 
late 1980s, approximately 300,000 hectares provided more than 
475,000 tons of white corn, the traditional corn of Bolivia. Yellow 
Cuban corn, grown in the tropical areas of Santa Cruz, was be- 
coming more common; 160,000 hectares produced 350,000 tons 



119 



Bolivia: A Country Study 

of yellow corn in 1988. Sixty percent of the corn (both white and 
yellow) was grown by small farmers in the valleys, with the remain- 
ing 40 percent planted by medium- to-large farmers in Santa Cruz. 
Small farmers used at least half of their corn for human consump- 
tion, as animal feed, or for brewing chicha, the primary intoxicat- 
ing beverage consumed by Bolivian Indians. The other half of their 
production and most of the commercially farmed corn were sold 
to Bolivia's forty private animal-feed plants, which bought 50 per- 
cent of the country's annual corn output. Many corn farmers were 
members of the Corn and Sorghum Producers Association (Produc- 
tores de Maiz y Sorgo — Promasor). Promasor was particularly ac- 
tive in Santa Cruz, where its members also produced 20,000 tons 
a year of sorghum, a drought-resistant crop, from some 6,000 hect- 
ares of land. 

Rice was an increasingly popular crop in Bolivia. Eaten by peo- 
ple in the lowlands and valleys since the 1950s, rice became the 
focus of government import-substitution policies beginning in the 
1960s. In the late 1980s, the country was generally self-sufficient 
in rice, some years importing and other years exporting. Bolivia's 
rice, however, was not of high quality by international standards, 
thus limiting export markets. In 1988 some 90,000 hectares of land, 
mostly in Santa Cruz and Beni departments, produced 140,000 
tons of rice. Bolivia imported one-fifth of its total consumption of 
rice in 1988. Approximately 20,000 small farmers produced the 
bulk of the country's paddy rice and, in turn, sold it via truckers 
to thirty private rice mills. 

Barley was a common crop in the highlands and was particu- 
larly well suited for the high altitudes. In 1988 the cultivation of 
80,000 hectares by 300,000 highland farmers produced 75,000 tons 
of barley, which was used primarily in the country's robust beer 
industry. About 10 percent of the barley was consumed on the farm 
as fodder. Bolivia imported about one-quarter of its total consump- 
tion of barley in 1988. 

Quinoa, the "mother grain" of the Incas, was the only food crop 
in the highlands that experienced sustained growth during the 1970s 
and 1980s. Cultivation of quinoa, which grows only above 2,000 
meters, jumped from 15,640 hectares producing 9,000 tons in 1980 
to 45,800 hectares producing 21,140 tons in 1984, and production 
continued to expand in the late 1980s. High in fiber and rich in 
protein, quinoa was a health food in industrialized countries. 

Despite repeated attempts by the government's National Wheat 
Institute (Instituto Nacional del Trigo) to make the nation self- 
sufficient in wheat production, Bolivia produced only about 20 



120 



Harvesting corn in 
Azurduy Province, 
Chuquisaca Department 
Courtesy Inter-American 
Foundation (Wilhelm Kenning) 



An El Ceibo farmer 
harvesting cocoa in the Alto Beni 
area of Nor Yungas Province, 
La Paz Department 
Courtesy Inter-American 
Foundation 
(Wilhelm Kenning) 




121 



Bolivia: A Country Study 

percent of the wheat that it consumed in the late 1980s. In 1988 
about 88,000 hectares produced 60,000 tons of wheat. In the same 
year, 280,000 tons of wheat were imported. In 1988 the United 
States Agency for International Development (AID) provided 
180,000 tons of wheat through its Public Law 480 (PL-480) Food 
for Peace Program. Western Europe and Canada operated pro- 
grams similar to the AID program but on a smaller scale. Argen- 
tina provided wheat in exchange for Bolivian natural gas. Smuggled 
wheat flour from Peru and Argentina represented a serious menace 
to domestic wheat production. In 1988 analysts estimated that 
60,000 tons of smuggled wheat had entered Bolivia annually. Small 
traditional farmers in the highlands and large soybean farmers in 
Santa Cruz provided most of the country's 1988 wheat harvest, 
which was roughly equivalent to output in 1978, but only wheat 
from the Santa Cruz area was used for commercial milling. Analysts 
believed that wheat would produce higher yields when the proper 
tropical seeds, fertilizer, and irrigation methods were used. 

Bolivians produced a wide range of vegetables, fruits, and other 
food crops, mostly for local consumption. The principal vegetable 
crops included kidney beans, green beans, chick peas, green peas, 
lettuce, cabbage, tomatoes, carrots, onions, garlic, and chili pep- 
pers. Also common were alfalfa, rye, cassava, and sweet potatoes. 
Some of the most popular fruits were oranges, limes, grapes, ap- 
ples, quince, papayas, peaches, plums, cherries, figs, avocadoes, 
pineapples, strawberries, bananas, and plantains. Fruits increas- 
ingly competed with coca cultivation in the 1980s. 

Cash Crops 

Soybeans were the most lucrative legal cash crop in Bolivia in 
the 1980s. Soybean production began in earnest in the early 1970s, 
following a substantial increase in the crop's world price. By the 
late 1980s, soybeans represented the country's most important oil- 
seed crop. In 1988 soybeans covered 65,000 hectares, and annual 
production amounted to about 150,000 tons, compared with 19,430 
hectares producing 26,000 tons a decade earlier. About one-third 
of the soybean harvest was used domestically in the form of soy- 
bean meal for the poultry industry. Other soybean meal was shipped 
to Peru and Western Europe, and raw soybeans were exported via 
rail to Brazil. In order to process soybean oil for the local market, 
the country maintained a crushing capacity of 150,000 tons in 1988. 
Locally manufactured soybean oil also competed with contraband 
products from neighboring countries. Most of Santa Cruz's soy- 
bean farmers were members of the well-organized and powerful 
National Association of Soybean Producers (Asociacion Nacional 



122 



The Economy 



de Productores de Soya — Anapo). Anapo, with assistance from 
AID, built new storage facilities that permitted continued expan- 
sion of the crop. Because of the dynamism of their crop, soybean 
farmers enjoyed the best availability of credit for all legal cash-crop 
producers. 

Coffee, another principal cash crop, was the second most im- 
portant agricultural export after timber. As the primary substitute 
crop offered to coca growers under the eradication program, coffee 
was of particular importance. Coffee production reached 13,000 
tons in 1988, nearly double the 1987 output, which was damaged 
by disease in western Bolivia. Over 20,000 hectares were devoted 
to coffee. Bolivia consumed 25 percent of its coffee crop locally in 
1988, with the balance exported both legally and clandestinely. 
Legal exports of 102,000 bags, sixty kilograms each as measured 
by the International Coffee Organization (ICO), were equivalent 
to Bolivia's export quota for 1988, which was over US$15 million. 
An ICO member since 1968, Bolivia was permitted to export 
170,000 of the sixty-kilogram bags in 1989. Approximately 25 per- 
cent of coffee exports left the country illegally in the late 1980s. 
Most coffee was grown by small farmers in the valleys or by large 
farmers in the lowlands. Most commercial farmers were members 
of the Bolivian Coffee Committee (Comite Boliviano del Cafe — 
Cobolca), which allocated ICO quotas. The coffee industry also 
received technical assistance from the Bolivian Institute of Coffee 
(Instituto Boliviano de Cafe), an autonomous government agency 
established in 1965 to run model farms and help control disease. 

Bolivia had been self-sufficient in sugar production since 1963, 
although sugarcane had been grown since the colonial era. Sugar- 
cane in the 1980s was a cash crop of significance for both the domes- 
tic and the export markets. In 1988 cultivation of sugarcane on 
62,000 hectares produced 140,000 tons of sugar. These figures 
represented a sharp decline from 1986 figures. The price of sugar 
had skyrocketed in the mid-1970s, doubling the number of hect- 
ares under sugarcane cultivation in a few years. As sugar prices 
declined, however, farmers opted for more lucrative crops, such 
as soybeans. The decline in the sugar industry also was caused by 
poor management, dwindling yields, and poor quality control. In 
1988 the country's six sugar mills operated at only 37 percent 
capacity. Sugarcane also was processed into methanol for the domes- 
tic and export markets. Continued controls on imports of sugar 
constituted one of the few exceptions to the import liberalization 
policies of the late 1980s. 

Although cotton was a boom crop in the early 1970s, produc- 
tion had waned since 1975. Grown mostly in Santa Cruz, cotton 



123 



Bolivia: A Country Study 

covered 54,000 hectares in 1975 but only 9,000 hectares in 1988. 
Production declined from 22,000 tons to 3,700 tons over the same 
period. Price was the primary reason for the decline, but insect 
problems, disease, and the lack of credit also contributed. Because 
Santa Cruz cotton farmers represented an important constituency, 
they had traditionally received highly favorable terms of credit. 
When cotton growing was no longer profitable, however, many 
cotton farmers defaulted on their loans, leaving the government's 
Agricultural Bank of Bolivia (Banco Agncola de Bolivia — BAB) 
in a poor financial position in the late 1980s. Because of the precipi- 
tous decline in the industry, the country's ten cotton mills were 
operating at under one-half of their capacity by the late 1980s. 

Cash crops of lesser importance included tobacco, tea, cocoa, 
and oilseeds, such as sesame, peanuts, castor beans, and sunflowers. 
Approximately 1 ,000 tons of tobacco for the Bolivian market were 
grown on about 1 ,000 hectares. Tea was grown as a secondary crop 
in the Yungas, Alto Beni (Upper Beni), and Santa Cruz areas. 
Eighty percent of the country's cacao trees, from which cocoa is 
derived, were grown in the Alto Beni by a network of cooperatives 
that were increasingly involved in processing cocoa and exporting 
chocolate products. Oilseeds were an important part of both the 
agricultural and the manufacturing sectors. The growing dominance 
of soybeans, however, diminished the role of other oilseeds in the 
economy. 

Coca 

Bolivia's most lucrative crop and economic activity in the 1980s 
was coca, whose leaves were processed clandestinely into cocaine. 
The country was the second largest grower of coca in the world, 
supplying approximately 1 5 percent of the United States cocaine 
market in the late 1980s. Analysts believed that exports of coca 
paste or cocaine generated from US$600 million to US$1 billion 
annually in the 1980s, depending on prices and output. Based on 
these estimates, coca-related exports equaled or surpassed the coun- 
try's legal exports. 

Coca has been grown in Bolivia for centuries. The coca plant, 
a tea-like shrub, was cultivated mostly by small farmers in the 
Chapare and Yungas regions. About 65 percent of all Bolivian coca 
was grown in the Chapare region of Cochabamba Department; 
other significant coca-growing areas consisted of the Yungas of La 
Paz Department and various areas of Santa Cruz and Tarija 
departments. 

Bolivian farmers rushed to grow coca in the 1980s as its price 
climbed and the economy collapsed. Soaring unemployment also 



124 



The Economy 



contributed to the boom. In addition, farmers turned to coca for 
its quick economic return, its light weight, its yield of four crops 
a year, and the abundance of United States dollars available in 
the trade, a valuable resource in a hyperinflated economy. The 
Bolivian government estimated that coca production had expanded 
from 1.63 million kilograms of leaves covering 4,100 hectares in 
1977 to a minimum of 45 million kilograms over an area of at least 
48,000 hectares in 1987. The number of growers expanded from 
7,600 to at least 40,000 over the same period. Besides growers, 
the coca networks employed numerous Bolivians, including car- 
riers, manufacturers of coca paste and cocaine, security person- 
nel, and a wide range of more nefarious positions. The unparalleled 
revenues made the risk worthwhile for many. 

Government efforts to eradicate the rampant expansion of coca 
cultivation in Bolivia began in 1983, when Bolivia committed it- 
self to a five-year program to reduce coca production and created 
the Coca Eradication Directorate (Direccion de la Reconversion 
de la Coca — Direco) under the Ministry of Agriculture, Camp- 
esino Affairs, and Livestock Affairs. Bolivia's National Directorate 
for the Control of Dangerous Substances (Direccion Nacional para 
el Control de Substancias Peligrosas — DNCSP) was able to eradi- 
cate several thousand hectares of coca. These efforts, however, put 
only a small dent in the coca industry and were highly controver- 
sial among thousands of peasants. Under the joint agreement signed 
by the United States and Bolivia in 1987, which created DNCSP, 
Bolivia allocated US$72.2 million for the 1988 to 1991 period to 
eradication programs, including a wide-ranging rural development 
program for the Chapare region. The program was aided by an 
88 percent drop in the local price of coca caused by the fall in co- 
caine prices in the United States. 

The economics of eradication were particularly frustrating. As 
more coca was destroyed, the local price increased, making it more 
attractive to other growers. Bolivia, however, was seeking addi- 
tional funds from the United States and Western Europe to pro- 
ceed with an eradication plan that was supposed to provide peasants 
US$2,000 per hectare eradicated. In 1988 coca growing became 
technically illegal outside a specially mandated 12,000-hectare area 
in the Yungas. A four-year government eradication campaign 
begun in 1989 sought to convert 55 percent of coca areas into legal 
crops. Coffee and citrus fruits were offered as alternative crops to 
coca despite the fact that their return was a fraction of that of coca. 

The cocaine industry had a generally deleterious effect on the 
Bolivian economy. The cocaine trade greatly accelerated the 
predominance of the United States dollar in the economy and the 



125 



Bolivia: A Country Study 

large black market for currency, thereby helping to fuel inflation 
in the 1980s. The escalation of coca cultivation also damaged the 
output of fruits and coffee, which were mostly destined for local 
consumption. Coca's high prices, besides being generally inflation- 
ary, also distorted other sectors, especially labor markets. Manufac- 
turers in the Cochabamba area during the 1980s found it impossible 
to match the wages workers could gain in coca, making their sup- 
ply of labor unreliable and thus hurting the formal economy. 

Farming Technology 

The use of purchased items such as fertilizers, tractors, and ir- 
rigation systems remained extremely low in the 1980s because tradi- 
tional farming methods continued to dominate. Because of their 
isolation and lack of technical support, Bolivian farmers used less 
fertilizer, about two kilograms per hectare, than any other coun- 
try in the Western Hemisphere. Most small farmers used natural 
fertilizers, such as manure, but even large farms in Santa Cruz 
found chemical fertilizers (all of which were imported) expen- 
sive because of transportation costs. The signing of an accord for 
a natural gas pipeline with Brazil in 1988, however, improved 
Bolivia's prospects for manufacturing its own chemical fertilizers. 
Bolivia's use of tractors, 0.2 per 1 ,000 hectares, was also the lowest 
in the Western Hemisphere. Most tractors were used in Santa Cruz. 
As the lowlands took on a greater role in agriculture, that ratio 
was expected to improve. By the late 1980s, just about 5 percent 
of the country's land was irrigated, one-third more than a decade 
earlier. 

Government extension services for farmers remained extremely 
inadequate in the late 1980s. Only one agricultural agent existed 
for each 7,000 farming households. The chief research institution 
for agriculture was the Bolivian Institute for Agricultural Tech- 
nology (Instituto Boliviano de Tecnologia Agricola — IBTA). Estab- 
lished in the mid-1970s, the IBTA concentrated mainly on new 
seed varieties for cash crops in the lowlands. The Institute for the 
Rural Development of the Altiplano (Instituto para el Desarrollo 
Rural del Altiplano — IDRA), the Center for Tropical Agricultural 
Research (Centro de Investigaciones de Agricultura Tropical — 
CIAT), and the national universities performed further research. 

Livestock 

Livestock production was active and well diversified. Beef cat- 
tle numbered an estimated 6 million head in 1988 and dominated 
all livestock production. Beef was the preferred meat in Bolivia. 
Unlike the rest of the agricultural sector, beef output grew over 



126 



The Economy 



4 percent a year during the 1980s. Over 70 percent of all cattle 
were raised in the eastern plains; the Beni was responsible for over 
40 percent of the national herd. Twenty percent of all cattle were 
found in the valleys and about 10 percent in the highlands, where 
they had served as beasts of burden since the Spanish introduced 
cattle in colonial times. In 1988 Bolivia slaughtered 200,000 tons 
of catde and exported 48,000 live cattle to Brazil, as well as processed 
beef to Chile and Peru. The country's medium and large cattle 
ranchers were organized into two large producer associations — 
one in the Beni and one in Santa Cruz — that marketed beef and 
attempted to set domestic prices. Bolivia had the potential to double 
its beef output in a relatively short period of time. 

The number of dairy cattle in Bolivia in the late 1980s was 
unknown but was well below what the country needed to meet 
domestic demand. The rate of milk consumption among Bolivians 
was among the lowest in the world. In 1988 Bolivia consumed 
130,000 tons of milk— 80,000 tons from its five dairies, 23,000 tons 
in donations from developed countries, and the rest in contraband, 
mostly in the form of evaporated milk. Dairy farms were medium 
to large in size and were concentrated in Cochabamba and Santa 
Cruz departments. The government was involved heavily in the 
dairy industry, but it was generally ineffective in improving nutri- 
tional levels in dairy products. 

Other livestock included chickens, pigs, sheep, goats, llamas, 
alpacas, vicunas, and even buffalo. Chicken production also was 
centered in Cochabamba and Santa Cruz departments and ex- 
perienced strong growth in the 1980s. Although the poultry industry 
faced high feed costs and substantial Chilean contraband, it 
produced 25 million broilers and 200 million eggs in 1988. The 
pork industry, also facing high feed costs, remained small. The 
pig population was estimated at slightly over 1 million, and the 
annual slaughter was roughly 45,000 tons of pork. Santa Cruz was 
expected to be the location of the pork industry's future growth. 
There were an estimated 10 million sheep and 1 million goats in 
Bolivia, mostly in the highlands, which was also home to 3 million 
llamas, 350,000 alpacas, and a dwindling number of vicunas. Ap- 
preciated for their fine wool and meat, llamas, alpacas, and vicunas 
received government protection because of their declining numbers. 

Forestry and Fishing 

Bolivia's vast forests and woodlands were one of the areas with 
the most potential for growth in agriculture. Official wood produc- 
tion grew by a third from the late 1970s to the late 1980s, when 
timber exports surpassed all other agricultural exports. Timber 



127 



Bolivia: A Country Study 

exports in 1987 reached US$31 million. Contraband in wood 
products, however, was expected to be equivalent to official ex- 
ports. Most of the smuggled wood was destined for Brazil. Bolivia's 
eastern lowlands were richly endowed with hundreds of species of 
trees, scores of which were commercially timbered. Deforestation 
and the threat of erosion caused by slash-and-burn agriculture and 
colonization in the lowlands were growing concerns. The govern- 
ment's Center for Forestry Development (Centro de Desarrollo 
Forestal) monitored the country's forests. 

Fish was a potential source of protein in the Bolivian's protein- 
deficient diet, but river fishing was mostly for direct consumption. 
With assistance from the British, the government was attempting 
to promote commercial fishing in the lowlands. Several process- 
ing plants were being considered to market the trout, pacu, and 
dorados that filled the many rivers of the Oriente. 

Energy 

The energy sector assumed critical importance in Bolivia's econ- 
omy in the 1980s. In 1985 hydrocarbons became the country's lead- 
ing export, accounting for over half of all exports, 11 percent of 
GDP, and more than 50 percent of central government revenues. 
Petroleum was the dominant hydrocarbon during the quadrupling 
of oil prices in the 1970s, but it was overshadowed in the 1980s 
by natural gas. The country also had an enormous, and largely 
untapped, potential for hydroelectricity. Despite its impressive 
energy resources, however, most Bolivians consumed relatively littie 
energy. As much as 90 percent of the mostly rural population re- 
mained without access to electricity in the late 1980s. 

Most of the nation's energy consumption was destined for 
residential or commercial purposes (46 percent), followed by trans- 
portation (31 percent), industry (20 percent), and mining (3 per- 
cent). Energy consumption was stable in the late 1980s, as the 
residential and industrial sectors assumed much of the energy previ- 
ously used by the mining industry. Firewood was the energy sup- 
ply for 74 percent of residential and commercial purposes, while 
hydrocarbons accounted for 20 percent and electricity for only 6 
percent. Indians in the highlands relied almost entirely on shrubs, 
charcoal, bottled gas, and animal dung as fuel sources. A new gas 
pipeline for urban dwellers in La Paz was expected to increase the 
amount of gas used by residences. The transportation sector re- 
lied entirely on hydrocarbons. Industry used primarily hydro- 
carbons (57 percent); bagasse, or sugarcane residue (30 percent); 
electricity (8 percent); and charcoal and firewood (5 percent). Char- 
coal and firewood accounted for the majority of the mining sector's 



128 



The Economy 



consumption. Before 1985 tin smelters consumed 85 percent of the 
country's charcoal. 

Petroleum and Natural Gas 

Petroleum had been known to exist in Bolivia since the colonial 
period, but serious exploration did not begin until 1916. In that 
year, foreign firms probed for oil, marking the start of a long and 
sometimes bitter relationship between foreign oil companies and 
the Bolivian government. The government nationalized the oil in- 
dustry from 1916 to 1920, denationalized it from 1920 to 1937, 
and nationalized it again in 1937 under the control of YPFB, where 
it remained in 1989. A revision of the country's petroleum code in 
1952 allowed foreign companies to drill for Bolivian oil. Neverthe- 
less, the only successful company — Bolivian Gulf, a subsidiary of 
Gulf Oil — was nationalized in 1969 in an acrimonious dispute with 
the government. Two foreign firms, Occidental International and 
Tesoro Petroleum, held service contracts with YPFB in the late 1980s. 

Oil production peaked in the early 1970s but declined through- 
out the rest of the decade and into the 1980s (see table 8, Appen- 
dix). Production dropped from 47,000 barrels per day (bpd) in 1973 
to only 21,000 bpd in 1988, the result of price fluctuations, obso- 
lete machinery, minimal exploration, YPFB mismanagement, and 
declining reserves. As part of the NPE, the government restruc- 
tured YPFB into three autonomous subsidiaries in 1985 and reduced 
its payroll by one-third. One of YPFB' s major goals was to acceler- 
ate oil exploration and improve its inadequate reserves-to- 
production ratio. Proven reserves were estimated at 158 million 
barrels in 1988. In order to augment reserves, most economists 
believed that Bolivia would need to rely more on foreign oil com- 
panies for exploration. 

Oil exploration in Bolivia in the 1980s remained highly regu- 
lated by the government, but revisions in the country's petroleum 
code were expected after 1988. For exploration purposes, the coun- 
try was divided into four regions, three of which were higher risk 
areas; in the fourth region, where reserves were unknown, YPFB 
had exclusive rights for exploration. The YPFB's region was lo- 
cated in southeastern Bolivia, and the other regions covered the 
rest of the country's mostly unexplored subsoil. YPFB, however, 
also issued contracts for foreign oil companies to explore portions 
of its own select region and others. In September 1988, Occiden- 
tal signed a thirty-year contract with YPFB for exploration and 
production in a 2. 5 -million-hectare area, encompassing the Madre 
de Dios and Lapachos regions of La Paz, Beni, and Pando depart- 
ments. YPFB also managed the country's oil refineries, which had a 
74,000 bpd capacity, or three times more than output. The refineries, 



129 



Bolivia: A Country Study 



BRAZIL 



F 



Au 



\ 



Riberalta \ 

Au 



A 



Au 



BRAZIL 



PERU/ 

J 



Au 



Ail*- ^ 
Au > 



Trinidad 



Sn Au 



Sn Au 



Santa Cruz 




Fe 



Puerto- { 
Su6rez. 
\ / 



CHILE S 



Tar/ya // Pe i 
ARGENTINA// 



PARAGUAY 



100 tSOKSfometefS 



s 



Boundary representation 
not necessarily authoritative. 



International boundary 
National capital 
Populated place 
Natural gas pipeline 
Proposed natural gas pipeline 
Crude petroleum pipeline 
Lithium and potassium deposits 
Tin and tungsten belt 



Key to Minerals 

Note: Underlined symbol indicates plant. 

Pet Petroleum 



Ag Silver 
Au Gold 
Bi Bismuth 
Fe Iron 

NG Natural gas 
Pb Lead 



Sb Antimony 

Sn Tin 

W Tungsten 

Zn Zinc 



Source: Based on information from Orlando D. Martino, Mineral Industries of Latin America, 
Washington, 1988, 22. 



Figure 9. Primary Petroleum, Natural Gas, and Minerals Activities, 1988 

located in Santa Cruz, Cochabamba, and Chuquisaca departments, 
produced a diverse range of petroleum products, such as lubricat- 
ing oils, gasoline, naphthas, jet fuels, diesel fuel, solvents, and ether 
(see fig. 9). 



130 



The Economy 



Seventy-five percent of Bolivia's oil was drilled in four Santa 
Cruz oil fields — La Pena, Monteagudo, Caranda, and Camiri — 
with the balance provided by fields in the departments of Chuquisa- 
ca and Tarija. A major new field, Vuelta Grande, was scheduled 
to begin production in 1989, providing upwards of 5,500 bpd. Most 
oil fields had large reserves of associated natural gas. 

Natural gas reserves in 1988 were estimated at 33 billion cubic 
meters. The primary gas fields were concentrated in Santa Cruz 
and Tarija departments, with additional fields scattered in vari- 
ous other departments. In 1988 natural gas production equaled 
roughly 13 million cubic meters a day, almost half of which was 
reinjected. Sixty-five percent of all gas production originated from 
four large gas fields in Santa Cruz: Rio Grande, Colpa, Vuelta 
Grande, and Caranda. In the late 1980s, YPFB exported close to 
90 percent of the country's gas, about 6 million cubic meters a day, 
to Argentina via an 847-kilometer gas pipeline that was constructed 
in 1972, extending from Santa Cruz to the border town of Yacuiba. 
In total, 4,346 kilometers of gas and oil pipelines of varying sizes 
extended through the country in 1988. Domestic gas use, equiva- 
lent to about 10 percent of production in 1988, was expected to 
increase when a gas pipeline connecting the highlands to the 
lowlands opened in 1988 and as electricity-generating plants in- 
creasingly turned to gas as their source of power. 

The contentious nature of negotiations between Bolivia and Argen- 
tina for purchasing natural gas in the mid-1980s demonstrated the 
subsector's dependence on foreign markets. Disagreements revolved 
around the market rate Argentina paid for Bolivian gas, the propor- 
tion of currency and in-kind payments, and Bolivia's failure to make 
its debt payments to Argentina, its largest bilateral creditor. Fol- 
lowing a two-year period that nearly bankrupted Bolivia's trea- 
sury, the two nations signed a comprehensive agreement in 1987. 
Under the accord, Bolivia agreed to cut its gas price by 20 percent 
and peg it to market levels. Argentina resumed its gas payments 
to Bolivia with 80 percent of its payment in convertible currencies 
and 20 percent in goods, such as wheat. In the late 1980s, however, 
the status of the agreement beyond 1992 remained unclear. 

After more than ten years of negotiations, in 1988 Bolivia and 
Brazil signed a preliminary agreement that was to pave the way 
for exports of natural gas, urea, and polyethylene to Brazil in the 
early to mid-1990s. Although the details were still being finalized 
in 1989, the pact was slated to include a 600-kilometer gas pipe- 
line from Santa Cruz to the border town of Puerto Suarez and then 
to Sao Paulo; 3 million cubic meters of gas exports a day; the 
manufacturing of 200,000 tons a year of urea fertilizers and 100,000 



131 



Bolivia: A Country Study 

tons of polyethylene, used for packaging and tubing; and a series 
of other thermal and hydroelectric projects. If the supply of gas 
did not reach Brazil by 1992, however, and the Argentine agree- 
ment was not renewed, Bolivia faced a potentially untenable cash- 
flow situation by 1993. 

Electricity 

Bolivia's installed electricity capacity by the mid-1980s had 
reached 566 megawatts, and government plans in the late 1980s 
projected growth in domestic demand and significant annual in- 
vestment in expanding domestic supply into the 1990s. Hydro- 
electric sources provided approximately 62 percent of the supply 
of electricity, followed by thermal sources with 25 percent and diesel 
with 13 percent. The National Electrification Institute (Instituto 
Nacional de Electrificacion), a branch of the Ministry of Energy 
and Hydrocarbons, provided diesel generators to those outside 
major cities and beyond the reach of the interconnected electricity 
system, which linked most major cities for the first time in the 1980s. 
The National Electricity Company (Empresa Nacional de Elec- 
tricidad — ENDE), also part of the Ministry of Energy and Hydro- 
carbons, controlled 80 percent of the country's electricity capacity, 
including five hydroelectric plants. Other producers of electricity 
included the United States-owned Bolivia Electricity Company 
(Compama Boliviana de Energia Electrica), serving La Paz and 
Oruro; the Cochabamba Light and Power Company (Empresa de 
Luz y Fuerza Electrica de Cochabamba); the Rural Electricity 
Cooperative (Cooperativa Rural de Electrificacion), working in 
rural areas; and Comibol, which generated much of its own elec- 
tricity, primarily from charcoal and firewood. ENDE established 
electricity rates, which were often subject to large increases. ENDE, 
as a consequence of the NPE, negotiated electricity rates with pri- 
vate companies and local city councils. Access to electricity by pri- 
vate citizens was growing in the late 1980s and was available to 
over 72 percent of urban dwellers. Rural citizens, however, lagged 
well behind; only about 10 percent had such access, low even by 
Latin American standards. 

The quality of electricity transmission was relatively good and 
generally reliable in larger cities. Electricity operated on a 50-cycle 
system, 120 and 220 volts in La Paz, and 220 volts in other major 
cities. To improve quality further and expand installed capacity, 
the government embarked in 1988 on a US$100 million invest- 
ment project in electricity, including new generation plants, gas 
turbines, and transmission lines. With funding from the World 
Bank and the Andean Common Market's Andean Development 



132 



The Economy 



Corporation, Bolivia was attempting to improve access to electric- 
ity for rural communities. 

The country's plans to tap its vast hydroelectric potential were 
less clear. In the late 1980s, Bolivia's hydroelectric capacity of ap- 
proximately 300 megawatts represented only 2 percent of the 
18,000-megawatt potential, estimated by engineering studies per- 
formed in the 1970s and 1980s. Although small- and medium-sized 
hydroelectric projects were under way through regional or local 
governments, any large-scale projects were dependent on negotia- 
tions in progress with Brazil over the price for natural gas exports. 

Policymakers also considered alternative energy resources, such 
as geothermal, coal, solar, wind, and biomass. Geothermal potential 
was positive with 350-megawatt capacity, including a possible plant 
at Sol de Manana in Laguna Colorada. Commercially exploitable 
coal resources remained unknown in the late 1980s. Solar, wind, 
and biomass sources offered varying potential but remained un- 
attractive because of the high per capita cost of their technology. 
Uranium deposits were known to exist as well, and the Bolivian 
Nuclear Energy Commission (Comision Boliviana de Energia 
Nuclear) was responsible for uranium exploration and production. 

Mining 

From 1557 to 1985, the mining industry dominated the Bolivian 
economy. By 1985, however, the production of every significant 
mineral in the country had failed to exceed the output registered 
in 1975. Moreover, the international tin market crashed in 1985. 
The mining sector in 1987 accounted for only 4 percent of GDP, 
36 percent of exports, 2.5 percent of government revenues, and 
2 percent of the labor force, compared with 8 percent of GDP, 65 
percent of exports, 27 percent of government revenues, and about 
6 percent of the labor force in 1977. Spurred by a massive increase 
in gold production, however, the mining sector rebounded in 1988, 
returning to the top of the nation's list of foreign exchange earners. 

Structure of the Mining Industry 

Comibol, created in 1952 and decentralized into five semiautono- 
mous mining enterprises in 1986, was a huge multimineral corpo- 
ration controlled by organized labor and the second largest tin 
enterprise in the world. In addition to operating twenty-one min- 
ing companies, several spare-parts factories, various electricity 
plants, farms, a railroad, and other agencies, Comibol also provided 
schooling for over 60,000 children, housing for mining families, 
health clinics, and popular subsidized commissaries called pulperias 



133 



Bolivia: A Country Study 



(see Glossary). By 1986 Comibol employed more nonminers than 
miners. 

Observers severely criticized Comibol' s mining policies. Comibol 
took fifteen years to bring tin production to its prerevolutionary 
levels. In addition, Comibol failed to invest sufficientiy in mining 
technology and existing mines, and it proved unable to open new 
mines. Indeed, except for the mid-1960s Comibol did not engage 
in exploration. In terms of administration, worker control eclipsed 
even technical and detailed administrative decisions. 

The decentralization of Comibol under the Rehabilitation Plan 
reduced the company's payroll from 27,000 employees to under 
7,000 in less than a year. All of Comibol' s mines, previously respon- 
sible for the bulk of mining output, were shut down from Septem- 
ber 1986 to May 1987 to examine the economic feasibility of each 
mine; some never reopened. Comibol' s mining and service com- 
panies were restructured into five autonomous mining subsidiaries 
(in Oruro, La Paz, Quechusa, Potosi, and Oriente) and two au- 
tonomous smelting companies (the Vinto Smelting Company and 
the still unopened Karachipampa smelter in Potosi), or they were 
transferred to ministries such as the Ministry of Social Services and 
Public Health or the Ministry of Education and Culture. The 
bureaucracy also underwent major administrative changes. 

For the first time since 1952, the country's medium miners, small 
miners, cooperatives, and other producers, which made up the rest 
of the mining sector, produced more minerals in 1987 than 
Comibol. The medium miners consisted of Bolivian and foreign 
mining companies in the private sector that were involved in the 
production of virtually every mineral, especially silver, zinc, anti- 
mony, lead, cadmium, tungsten, gold, and tin. Nevertheless, the 
collapse of tin and the decline in other commodity prices in the 
mid-1980s also severely affected the private mining sector. Nineteen 
mining companies with 4,020 employees constituted the Medium 
Miners Association (Asociacion de Mineria Mediana) in 1987, com- 
pared with twenty-eight companies and 8,000 workers in 1985. Only 
615 mines in 1987 were part of the National Chamber of Mining 
(Camara Nacional de Mineria), the equivalent of a small miners 
association, compared with 6,300 mines and 23,000 workers be- 
fore the crash. Traditionally, small miners had to market their min- 
ing output through the Mining Bank of Bolivia (Banco Minera de 
Bolivia — Bamin), which was also restructured after 1985 into a joint 
venture of private and public interests. Beginning in 1987, small 
miners no longer had to sell their exports through Bamin, a policy 
shift that boosted that group's output and foreign sales. Mining 
cooperatives and other miscellaneous miners made up the rest of 



134 




Indian woman shoveling salt at the Uyuni Saltpan, Potosi Department 
Courtesy Inter-American Foundation (Kevin Healy) 
Mining tungsten in the Kami mine, Cochabamba Department 



135 



Bolivia: A Country Study 



the producers in the mining sector, although their output was ag- 
gregated with that of the small mining sector. The National Fed- 
eration of Mining Cooperatives of Bolivia (Federacion Nacional 
de Cooperativas Mineras de Bolivia) served as an umbrella organi- 
zation for the country's 434 mining cooperatives, 82 percent of 
which mined gold. Only a few of these groups, however, were offi- 
cially registered with the National Institute of Cooperatives (Insti- 
tuto Nacional de Cooperativas). Most cooperatives were small and 
consisted of individual miners organized by mine or specific mineral 
and using very little technology. 

Tin and Related Metals 

Bolivia's mines had produced cassiterite, the chief source of tin, 
since 1861 . Although long among the world's leading tin producers 
and exporters, the industry faced numerous and complicated struc- 
tural problems by the early 1980s: the highest-cost underground 
mines and smelters in the world; inaccessibility of the ores because 
of high altitudes and poor infrastructure; narrow, deep veins found 
in hard rock; complex tin ores that had to be specially processed 
to extract tin, antimony, lead, and other ores; depletion of high- 
grade ores; almost continual labor unrest; deplorable conditions 
for miners; extensive mineral theft orjuqueo; poor macroeconomic 
conditions; lack of foreign exchange for needed imports; unclear 
mining policies; few export incentives; and decreasing international 
demand for tin. Between 1978 and 1985, Bolivia fell from the sec- 
ond to the fifth position among tin producers. 

In the late 1980s, however, tin still accounted for a third of all 
Bolivian mineral exports because of the strong performance by the 
medium and small mining sectors. The largest tin-mining com- 
pany in the private sector was Estalsa Boliviana, which dredged 
alluvial tin deposits in the Antequera River in northeastern Potosf 
Department. The Mining Company of Oruro operated the coun- 
try's richest tin mine at Huanuni. The country's tin reserves in 
1988 were estimated at 453,700 tons, of which 250,000 tons were 
found in medium-sized mines, 143,700 tons in Comibol mines, 
and 60,000 tons in small mines. In the late 1980s, tin was exported 
mainly in concentrates for refining abroad. Eighty percent of all 
exports went to the European Economic Community and the 
United States, with the balance going to various Latin American 
countries and Czechoslovakia. 

Bolivia was a founding member of the International Tin Coun- 
cil (ITC), a body of twenty- two consumer and producer countries 
that since 1930 had attempted to regulate tin markets through buffer 
stocks. Bolivia, however, did not sign the ITC's International Tin 



136 



The Economy 



Agreements in the 1970s and 1980s. In 1983 Bolivia joined the 
newly formed Association of Tin Producing Countries, which 
attempted — unsuccessfully — to control tin prices through a cartel 
approach to commodity regulation. After a period of decline, tin 
prices rebounded in the late 1980s. 

Government policies since the early 1970s had sought to expand 
the percentage of metallic or refined tin exports that offered greater 
returns. As a result, smelting increased during the 1970s, but in 
the 1980s the excessive costs of the nation's highly underutilized 
smelting operations contributed to the decision to restructure 
Comibol. 

Silver, zinc, lead, bismuth, and other minerals were all found 
with Bolivia's large tin reserves and, like tin, were considered stra- 
tegic minerals. Because of the common mixture of ores, tin min- 
ing frequently encompassed the mining of other minerals as well. 
With the collapse of tin, the government was increasingly interested 
in exploiting its large reserves of other minerals, particularly sil- 
ver and zinc. Three centuries after being the world's largest 
producer of silver, Bolivia still produced 225 tons of silver in 1988, 
as compared with about 140 tons in 1987 (see table 9, Appendix). 
Zinc reserves were large, 530,000 tons, and the expansion of zinc 
production enjoyed growing government support. Zinc output also 
rose in the late 1980s from roughly 39,000 tons in 1987 to over 
53,000 tons in 1988, compared with 47,000 tons in 1975. Nearly 
all zinc was exported. In 1987 the government declared the con- 
struction of a new zinc refinery in Potosi a national priority. 
Although the authorities considered lead a minor metal, produc- 
tion increased from 9,000 tons in 1987 to 1 1 ,000 tons in 1988. Bis- 
muth reserves were estimated at 4,100 tons, and production in 1987 
reached two- thirds of a ton entirely by small miners. Bolivia, the 
site of the International Bismuth Institute, was once the sole 
producer of bismuth in the world. 

The lead and silver Karachipampa facility in Potosi was the na- 
tion's largest smelter. Completed in 1984, Karachipampa employed 
Soviet technology but was constructed by a company from the Fed- 
eral Republic of Germany (West Germany). The smelter's gross 
capacity was an enormous 51,000 tons a year. Widely criticized 
for its overcapacity, the plant was not scheduled to open until 1992 
at the earliest because of insufficient ore. 

Bolivia mined about a fifth of the world's antimony in the late 
1980s and was the leading producer among market economies. Pri- 
vate companies were responsible for all antimony production. The 
largest output came from the United Mining Company (Empresa 
Minera Unificada), which controlled the two largest antimony 



137 



Bolivia: A Country Study 

mines, located at Chilcobija and Caracota, both in Potosi Depart- 
ment. Medium and small miners generated an average of 9,500 
tons of antimony a year in the mid- to late 1980s, all of which was 
exported. Antimony, a strategic mineral used in flameproofing com- 
pounds and semiconductors, was exported in concentrates, tri- 
oxides, and alloys to all regions of the world, with most sales going 
to Britain and Brazil. Antimony reserves in 1988 stood at 350,000 
tons. 

Bolivia was also the leading producer of tungsten among mar- 
ket economies. But the dramatic decline in tungsten prices in the 
1980s severely hurt production, despite the fact that reserves stood 
at 60,000 tons. Medium and small producers accounted for over 
80 percent of the country's tungsten production in the late 1980s. 
The International Mining Company's Chojilla mine was the source 
of most tungsten output. Tungsten production sank from 2,300 
tons in 1984 to barely more than 800 tons in 1987 because of fall- 
ing international prices. Tungsten was sold to West European, East 
European, and Latin American countries, as well as to the United 
States. 

Other Metals and Minerals 

Gold prospecting in the country's rivers and mines was brisk 
in the late 1980s. Because of Bolivia's vast territory and the high 
value of gold, contraband gold accounted for approximately 80 per- 
cent of exports. Official gold exports were approximately five tons 
in 1988, up sharply from less than one ton in 1985. In order to 
capture gold as a reserve for the Central Bank, in 1988 the govern- 
ment offered a 5 percent bonus over the international price of gold 
on local sales to the Central Bank. Gold was mined almost exclu- 
sively by over 300 cooperatives throughout the country, along with 
about 10,000 prospectors. A large percentage of the cooperatives 
worked in Tipuani, Guanay, Mapiri, Huayti, and Teoponte in 
a 21 ,000-hectare region set aside for gold digging and located 120 
kilometers north of La Paz. Mining cooperatives in the late 1980s 
had requested an additional 53,000 hectares from the government 
for gold prospecting. Others panned for their fortunes in remote 
villages like Araras along the Brazilian border in the Beni. Small- 
scale operations were very traditional and wasteful. Analysts pre- 
dicted that more commercial production, such as the dredging of 
alluvial deposits, would maximize gold output. A few medium-sized 
mining operations, as well as the Armed Forces National Develop- 
ment Corporation (Corporacion de las Fuerzas Armadas para el 
Desarrollo Nacional — Cofadena) became involved in the gold rush 
in the 1980s. Government policy favored augmenting gold reserves 



138 



The Economy 



as a means of leveraging more external finance for development 
projects. 

The government's mineral policy also gave a high priority to 
exploiting the lithium and potassium deposits located in the brines 
of the southern Altiplano's Uyuni Saltpan, estimated to be the larg- 
est of their kind in the world. The United States Geological Sur- 
vey, the Bolivian Geological Survey (Servicio Geologico de Bolivia), 
and others discovered large reserves of lithium in 1976. By 1985 
Bolivia's National Congress had made lithium extraction a national 
priority and created the Industrial Complex of the Uyuni Saltpan 
(Complejo Industrial de los Recursos Evaporiticos del Salar de 
Uyuni) to explore, exploit, and market lithium. Because the ex- 
traction of lithium is an expensive, technically complex process, 
the government sought bids for some foreign investment in lith- 
ium in the late 1980s. In addition to an estimated 5.5 million tons 
of lithium reserves, Bolivia also had approximately 110 million tons 
of potassium, 3.2 tons of boron, and an unknown amount of mag- 
nesium associated with lithium. 

After years of planning, the Mutun iron mine was scheduled 
to open its first of two plants in 1989. The Mutun mine, the sole 
responsibility of the Mining Company of the Oriente, was expected 
to yield 592,000 tons of iron in its first five years of operation. 
Mutun was also expected to produce manganese. The prospects 
for the steel industry, which was controlled by the Bolivian Iron 
and Steel Promotion Unit (Unidad Promotora de La Siderurgia 
Boliviana, formerly known as the Bolivian Iron and Steel Indus- 
try, or Sidenirgica Boliviana), however, were bleak. After more 
than a decade of planning a national steel plant, Bolivia was still 
unable to obtain financing for such a project, especially given inter- 
national overcapacity in steel. The possibility of a national steel 
plant appeared unlikely at the end of the 1980s. 

Manufacturing and Construction 

The manufacturing sector played a minor role in the economy, 
and virtually all of its activity was linked to the three major sectors 
of the economy: agriculture, hydrocarbons, and mining. Since 1952 
manufacturing had contributed generally 15 percent of GDP, but 
the deep recession of the 1980s severely weakened the sector, making 
it contract by 35 percent from 1980 to 1987. In that same period, 
manufacturing's share of GDP dropped to about 10 percent, and 
its share of the labor force fell from 177,000 to 117,000, or about 
7 percent of all workers. The sector focused primarily on the domes- 
tic market, but in 1987 nontraditional exports, those other than 
hydrocarbons, agriculture, or mining, amounted to over 18 percent 



139 



Bolivia: A Country Study 

of total exports. In the late 1980s, manufacturers continued to face 
onerous structural constraints: a small domestic market, tight credit 
policies, high transportation costs, a lack of infrastructure, insuffi- 
cient skilled labor and managers, excessive contraband, low im- 
port tariffs, dependence on imported inputs, and the declining 
production of domestic inputs, such as agricultural goods, petro- 
leum, and minerals. In addition, the NPE promoted greater ex- 
port orientation and diversity for the sector, goals that few 
manufacturers were capable of reaching in 1985. Similarly, the 
NPE's policies of import liberalization and tight credit, low con- 
sumer demand, high utility costs, and a new VAT hurt most man- 
ufacturers accustomed to operating in a protectionist environment. 
From 1985 to 1987, more than 130 manufacturing firms collapsed, 
and the industry as a whole operated at only about half of its ca- 
pacity. 

Manufacturing grew at a pace of approximately 5 percent an- 
nually during the 1960s and 1970s, with slightly faster growth in 
the second decade. Until the 1970s, the government limited itself 
to the promotional and funding activities of the Bolivian Develop- 
ment Corporation, which was dissolved in 1985 in favor of regional 
development corporations in each department. In 1971, however, 
the Industrial Incentives Law granted varying import duty excep- 
tions on capital and intermediate goods, accelerated depreciation 
allowances, deduction of indirect taxes, and a ten-year income ex- 
emption in the case of firms establishing themselves in the depart- 
ments of Pando, Beni, Chuquisaca, and Tarija. To manage the 
law, the government created the National Investment Institute (In- 
stitute Nacional de Inversiones) to screen and set priorities for in- 
vestment. Investment in manufacturing increased as a result of these 
measures, including a surge in public sector spending from 15 per- 
cent of all manufacturing investment to 40 percent during the 1970s. 
The state's investment consisted of industrial plants in milk process- 
ing, cement, sugar, rubber, ceramics, metals, glass, petroleum, 
gas, and others, some of which were eventually sold to the private 
sector. The 1971 investment law was revised in 1981, but by 1986 
both had been supplanted by the NPE's uniform import tariffs and 
tax reform. Government policy in the late 1980s focused on de- 
veloping a new investment code to stimulate increased foreign in- 
vestment in export industries. Nevertheless, Bolivia's history of 
political instability, labor unrest, and structural bottlenecks made 
the task of luring foreign investors formidable. 

The manufacturing industry consisted of nine subsectors — food, 
beverages, and tobacco; textiles, garments, and leather goods; 
chemicals and plastics; timber, wood products, and furniture; paper 



140 



The Economy 



products; nonmetallic minerals; basic metal industries; metal 
production, equipment, and machinery; and other manufactur- 
ing. Many producers who were involved in manufacturing and 
related activities were classified as part of the informal sector (see 
Informal Sector, this ch.). The food, textile, and metal industries 
contributed over 80 percent of all manufacturing output and over 
half of the sector's labor force. Except for the manufacturing of 
hydrocarbons and minerals, there was little heavy industry. Ex- 
cept for agricultural processing, many manufacturers imported as 
much as 90 percent of their final product, making much of the sector 
more commercial than industrial. Many manufacturers ran only 
small artisan shops, and most employed fewer than ten workers. 

The agricultural processing subsector consisted of milling wheat 
into flour, crushing oilseeds, refining sugar, blending coffee, mill- 
ing cotton into textiles, canning fruits and vegetables, packing meat, 
and processing dairy products. Most agro-industries were located 
in Santa Cruz Department. Domestically made beverages, such 
as soft drinks, beer, and chicha, were also popular. A domestic 
cigarette and cigar industry also existed. In 1988 the government 
considered the possibility of legally exporting cocaine to the inter- 
national pharmaceutical industry. The textile industry, another 
major subsector, had played a declining role in the economy since 
1970 as mining and hydrocarbons occupied a more prominent place. 
The country's ten textile mills purchased local cotton and wool for 
their products, but the poor quality of garments, leather goods, 
and footwear, as well as the competition from smuggled goods, 
undermined growth. 

Industry also produced a significant supply of local chemicals, 
plastics, medicines, industrial chemicals, gases, and insecticides. 
The subsector' s output was expected to increase vigorously as the 
gas pipeline project with Brazil became operative and the manufac- 
ture of fertilizers and other petrochemicals increased. Although the 
cutting of timber accelerated and scores of small sawmills became 
active in the 1980s, the wood and furniture industry remained well 
under its potential. The wood industry was completely unregulated, 
and as the contraband wood trade thrived, Brazil benefited most 
from the increased felling of Bolivian trees. Timber also fed the coun- 
try's paper industry, which consisted of several dozen mostly urban 
firms producing a limited product line of paper products, newsprint, 
and cardboard. The construction industry was primarily fed by 
the manufacturing of nonmetallic minerals, notably limestone, 
clays, and salts, all of which were found in abundant quantities. 
The metal industries fabricated a wide range of ferrous and non- 
ferrous metal alloys, iron, steel, tubing, vehicles, some appliances, 



141 



Bolivia: A Country Study 

batteries, electrical transformers, sewing machines, farm equip- 
ment, bicycles, and transport equipment. In addition, Cofadena 
assembled automobiles in Santivafiez, Cochabamba Department, 
as part of an agreement with the Andean Common Market (Ancom, 
also known as the Andean Pact; see Foreign Relations, ch. 4). 

The country's construction industry consisted of approximately 
600 mostly small companies operating primarily in the cities of La 
Paz, Santa Cruz, Cochabamba, and Oruro. Construction activ- 
ity soared in the 1960s and 1970s because of renewed investment 
in public works and a residential housing boom in the larger 
cities. Most Bolivians, however, continued to build their own homes 
by more traditional means. The deep recession of the early 1980s 
and the extremely tight credit policies of the late 1 980s slowed con- 
struction activity greatly. In the late 1980s, construction contributed 
an average 3 percent of GDP. As part of the reactivation policies 
of 1987, the government created the National Housing Fund (Fondo 
Nacional de Vivienda — Fonvi) to inject credit into the housing 
industry and to foster housing construction and home im- 
provements. 

With the exception of steel, the construction industry received 
most of its inputs from domestic industry: limestone, cement, wood 
products, and metal products. The cement industry in particular 
was very large, the four cement plants providing an installed cement 
capacity in 1989 of 700,000 tons per year. The three state-owned 
cement factories were run by their respective regional development 
corporations in Tarija, Cochabamba, and Chuquisaca departments 
and contributed 70 percent of total cement production. The only 
private company, the Bolivian Cement Company (Sociedad 
Boliviana de Cementos) in Viacha, La Paz Department, provided 
the balance. In the late 1980s, about 400,000 tons per year of local 
limestone fed cement production. 

Services 

Banking and Financial Services 

In the late 1980s, commercial banks were characterized by their 
limited numbers, local prominence, concentration of deposits in 
a few institutions, and generally shaky financial status. Only thir- 
teen commercial banks remained in 1988 after several locally owned 
banks had closed because of fraud and insolvency. Ten of these 
institutions were local; Citibank was the only United States bank 
still operating in the country. The three foreign banks remained 
generally inoperative, however, and were restricted to collecting 
previous loans. The country's top five banks — the Bank of Santa 



142 



The Economy 



Cruz, Bolivian American Bank, National Bank, Mercantile Bank, 
and Bank of Cochabamba — controlled 61 percent of deposits at the 
end of 1988. Over half of the local commercial banks continued 
to report losses in 1987. In 1988 bad debt constituted 15 percent 
of the debt owed to local banks, whereas as much as 64 percent 
of the debt owed to foreign banks was deemed bad. Still, commer- 
cial banks remained the core of the private financial sector, with 
assets totaling US$357 million in 1988. 

Government policy changes over the legality of deposits in United 
States dollars severely affected the sector during the 1980s and were 
directly responsible for a large part of the industry's poor health, 
although financial mismanagement was also a factor. From 1976 
to 1982, dollar deposits in bank accounts were legal; by 1982 deposits 
in United States currency represented 90 percent of all deposits. 
From 1982 to 1985, however, the Siles Zuazo government made 
it illegal to retain dollar accounts and forced banks and other finan- 
cial institutions to convert deposits and loans into Bolivian pesos 
at the official exchange rate, which essentially subsidized the fading 
peso. Within three years after the decision of the Paz Estenssoro 
government in 1985 to again legalize dollar accounts, 70 percent 
of all savings deposited in commercial banks were in dollars. 
Although the deregulation of the financial system after 1985 helped 
to expand the deposit base, legalizing dollar accounts also signified 
the acceptance of millions of coca dollars that were laundered 
through the banking system. During this period, moreover, al- 
though many banks were ravaged by hyperinflation, other banks 
and their top officials had profited handsomely from the rampant 
currency speculation and other illegal activities. 

Despite deregulation, banking generally remained an elite ac- 
tivity characterized by extremely high collateral requirements, ex- 
cept for top clients. Interest rates that were 10 to 20 percent above 
the prevailing rates in the United States also discouraged individuals 
and smaller businesses from seeking credit from commercial banks. 
Informal credit markets flourished. Interest rates varied consider- 
ably for boliviano deposits and loans versus dollar deposits and 
loans. High interest rates in the late 1980s resulted from restric- 
tive monetary policies, continued uncertainty about the economy's 
future, and the high demand for credit. 

In addition to normal commercial banks, there were three pri- 
vate sector specialized banks that lent to industry but mobilized 
their capital base from means other than deposits. In the late 1980s, 
the only specialized bank that remained highly active was the In- 
dustrial Bank (Banco Industrial), which was established in 1963. 
The other two specialized banks — the Industrial Finance Bank 



143 



Bolivia: A Country Study 

(Banco de Financiamiento Industrial) and the Bolivian Investment 
Bank (Banco de Inversiones Boliviano) — were established more re- 
cently. 

Other private sector financial institutions consisted of savings 
and loans, mortgage houses, credit unions, insurance companies, 
exchange houses, and, as of 1988, a stock exchange. As with com- 
mercial banking, these entities also grew rapidly in the 1960s and 
1970s and greatly contracted in the 1980s. The principal savings 
and loan body, the Central Housing Savings and Loan Board (Caja 
Central de Ahorro y Prestamo para la Vivienda — Cacen), was also 
the institution most involved with mortgage financing. Established 
in 1966, Cacen operated privately through a network of coopera- 
tive savings and loan associations that promoted housing construc- 
tion and offered mortgages and credit for home remodeling. Credit 
unions were also popular and functioned under the umbrella of 
the National Federation of Credit Unions (Federacion Nacional 
de Bancos Cooperativos). Fifteen companies, five of which were 
multinational firms, sold insurance policies in the mid-1980s. Ex- 
change houses, which dealt with international currency transac- 
tions, were also numerous, as were a whole range of more informal 
financial intermediaries, both legal and illegal, that chiefly oper- 
ated in United States dollars. In 1988 Bolivia inaugurated a seventy- 
member stock exchange that was financed by the World Bank and 
AID. 

Public sector financial institutions included the Central Bank, 
BAB, Bamin, and the State Bank (Banco del Estado — Banest). 
Under the 1985 NPE restructuring policy, the Central Bank as- 
sumed the outstanding debt of other public sector institutions. The 
reorganization of BAB confined it to new credit limits per loan and 
focused its business on loans to small farmers through its regional 
and provincial offices. The government converted Bamin into a 
mixed entity, both publicly and privately owned. Bamin primarily 
assisted the small mining sector by importing mining equipment 
and marketing ores. As a result of the modifications in public sec- 
tor financial institutions, Banest became the sole development bank 
of the central government, analyzing investment strategies, writ- 
ing feasibility studies, and providing credit to the private sector 
through forty-five national offices. 

Transportation 

Inadequate and costly transportation, a result of the country's 
rugged terrain and scattered population, persisted as a major ob- 
stacle to faster growth and development in the late 1980s. Bolivia's 
access to foreign markets has been hampered since the loss of its 



144 



The Economy 



Pacific Ocean ports in the War of the Pacific (1879-83). The coun- 
try's various geographical obstacles and inadequate transportation 
infrastructure also have hindered economic activity, especially after 
the latter shifted from the highlands to the lowlands. Although the 
infrastructure has grown significantly since the 1952 Revolution, 
an adequate network of integrated transportation systems was still 
distant in the late 1980s, as was the large external financing it would 
require. 

Bolivia's road system accounted for the overwhelming share of 
domestic transportation. In 1988 the nation had over 41,000 kilo- 
meters of roads, 3 percent of which were paved, 16 percent gener- 
ally gravel, and 81 percent dirt. La Paz's steep and narrow streets 
were primarily cobblestone. The National Road Service (Servicio 
Nacional de C aminos — Senac), established in 1964 when there were 
only 3,000 kilometers of roads, supervised road construction and 
maintenance. Observers criticized Senac for haphazard road de- 
velopment and substandard road maintenance, especially along the 
backbone of the paved system, the 560-kilometer Cochabamba- 
Santa Cruz highway (see fig. 10). In the late 1980s, Senac received 
funding from the Inter-American Development Bank (IDB) to 
repave this highway, the main access to the agricultural frontier. 
In addition, the winding mountain roads were poorly maintained 
and lacked such safety features as guard rails. Mountain and 
lowland roads were often impassable during the rainy season. Many 
blamed the rapid deterioration of roads on too-heavy, poorly main- 
tained trucks and buses. Government policies were aimed at en- 
larging and improving the network of roads in the lowlands, 
particularly the Chapare, and connecting La Paz with Santos, 
Brazil, by paved road. 

At least 110,000 vehicles were registered in the late 1980s, in- 
cluding about 71,000 automobiles or light vehicles, 30,000 heavy 
trucks, and 9,000 buses. In addition, the government reported about 
50,000 motorbikes, 18,000 jeeps, 27,000 vans, and 37,000 light 
or flatbed trucks. Flotas (large buses) operated primarily in rural 
areas, and micros (small buses) operated throughout the country; 
taxis existed in larger cities. Many Indians in the highlands, how- 
ever, still used llamas as a main means of transporting loads, such 
as market produce. 

The most important transport system for external trade, exclud- 
ing gas and oil pipelines, was the railroad. The country's rail sys- 
tem grew in stride with the tin industry, and the first railroad from 
Oruro to Antofagasta, Chile, opened in the 1880s (see Reconstruc- 
tion and the Rule of the Conservatives, ch. 1). The railroad later 
extended from Oruro to the cities of La Paz, Cochabamba, and 



145 



Bolivia: A Country Study 



A 



BRAZIL / ^ "\ 

/ ^Guayaramepr^ 
Riberalta\ \ 



— — International boundary 

^ National capital 

. Populated place 

Pan American Highway 

Road 

Railroad 

4* Airport 



50 100 150 Kilometers 

I — 1 — H — h 1 

50 100 150 Miles 




BRAZIL 



Puerto \ 
Suarez . 



CHILE \ 



Viflazon\\- v 
ARGENTINA 



PARAGUAY 



Boundary representation 
■ . no? necessarily authoritative. 



Figure 10. Transportation System, 1988 



Potosi. In 1913 a railroad from La Paz to Arica, Chile, also was 
opened, and by the 1950s the last major rail system from Santa 
Cruz to Sao Paulo, Brazil, was completed. By the late 1980s, Bolivia 
possessed an extensive but aging rail system that operated over 3 , 700 
kilometers of rail and carried over 535 million tons of freight and 
2.4 million passengers a year. The National Railroad Enterprise 
(Empresa Nacional de Ferrocarriles — Enfe) operated the dilapidated 



146 



The Economy 



system, which had been subject to World Bank rehabilitation 
schemes since 1970. Government policies emphasized the continued 
upgrading of the railroad and plans to join the Atlantic and Pacific 
coasts by rail. In 1988 the Argentine Railroad Company (Ferro- 
carriles Argentinos) began work on the Expreso del Sud rail line, 
which would connect Buenos Aires with La Paz and eventually 
Matarani, Peru, to form the Liberators of America Corridor (Co- 
rredor Libertadores de America), a new Atlantic-Pacific railroad 
in South America. The Bolivian government also contemplated 
another transoceanic railroad linking Santa Cruz to Cochabamba 
and thus integrating its Andean and lowland railroads. 

Air travel was common in Bolivia because of the great physical 
barriers that partitioned the country. The government's Adminis- 
tration of Airports and Aerial Navigation Auxiliary Services (Ad- 
ministration de Aeropuertos y Servicios Auxiliares de la Navegacion 
Aerea — AASANA) managed the country's thirty-two official air- 
ports, only six of which had paved runways. Bolivia had two in- 
ternational airports: Kennedy International Airport outside La Paz 
(the highest commercial airport in the world) and Viru-Viru in 
Santa Cruz. There were also an estimated 800 unofficial airstrips, 
particularly in the lowlands. Many of these were clandestine air- 
strips used in narcotics trafficking. 

Most air activity consisted of domestic and international travel 
and freight, such as beef exports. The frequent need to rely on air 
transportation for both domestic and international freight explained 
the high cost of transportation in general. Lloyd Bolivian Airline 
(Lloyd Aereo Boliviano — LAB), owned both by the government 
and by private interests, was the country's main airline and car- 
ried over 70 percent of all domestic passengers — over 1 million pas- 
sengers a year — in the 1980s. LAB serviced most Bolivian cities, 
most major Latin American cities, and many other international 
destinations. Argentine, Brazilian, Chilean, Colombian, Para- 
guayan, United States, and West German airlines maintained 
flights to and from Bolivia. Military Air Transports (Transportes 
Aereos Militares — TAM) also served as a carrier for about 50,000 
domestic passengers a year (see Civil Aeronautics, ch. 5). In addi- 
tion, 170 small taxi airplanes supplemented LAB's domestic ser- 
vice. There were two major air taxi companies. 

Rivers also served as a common means of transportation, espe- 
cially in the underpopulated eastern plains. Bolivia possessed more 
than 14,000 kilometers of inland waterways, including Lake 
Titicaca, the highest navigable lake in the world. Over thirty rivers 
from the Amazon system flowed through Bolivia. The major river 
systems used for transport were the Ichilo-Mamore, Beni-Madre 



147 



Bolivia: A Country Study 



de Dios-Orton, and Itenez-Paraguay. Capitanias (river stations) in 
Trinidad, Riberalta, and Guayaramerin oversaw the 360 craft that 
used the nation's rivers. Most vessels were under fifty tons. In 1988 
Bolivia signed an agreement — also approved by Argentina, Brazil, 
Paraguay, and Uruguay — that guaranteed the free passage of ships 
on the Parana and Paraguay rivers. 

In the late 1980s, Bolivia used the ports and warehousing facili- 
ties at Arica and Antofagasta in Chile, Matarani and Ilo in Peru, 
and Santos in Brazil as its major outlets to the sea. In addition, 
Bolivia was granted free port facilities in Rosario, Argentina; Nueva 
Palmira, Uruguay; and Belem, Brazil. Nevertheless, Bolivia con- 
tinued to negotiate with its neighbors about access to its former 
seaports, long a matter of national pride for the country. 

Communications 

Bolivia's evolving communications industry helped to mitigate 
the regionalism that characterized the nation. In 1988 an estimated 
3.5 million radios had access to over 125 radio stations ranging 
in power from 0.5 to 25 kilowatts. Both the size of the country and 
the mountainous terrain explained the proliferation of stations, 
about 80 percent of which were AM stations. La Paz was the site 
of forty stations, which broadcast in Spanish, Quechua, and Aymara 
(see Ethnic Groups, ch. 2). Most stations were privately owned. 

The number of private television stations in La Paz increased 
during the 1980s to seven, five of which were private. Other cities 
hosted private stations as well. Although the National Television 
Company (Empresa Nacional de Television) directed all govern- 
ment programming, foreign programs dominated most stations. 
According to the United States Department of Commerce, Bolivia 
had 650,000 television sets in 1988. 

Bolivia was served by six main daily newspapers ranging in cir- 
culation from 20,000 to 80,000. Ultima Hora, El Diario, Hoy, and 
Presencia were the largest periodicals. Santa Cruz's El Mundo and 
Cochabamba's Los Tiempos were smaller but were also circulated 
nationally. 

The National Telecommunications Enterprise (Empresa Na- 
cional de Telecomunicaciones — Entel) managed the country's tele- 
phone system. Bolivia had only 65,000 telephones in 1988, or fewer 
than 3 sets per 100 inhabitants. Only users located in the major 
cities enjoyed direct-dialing services. Direct international dialing 
was introduced for the first time in the late 1980s. Installing a new 
telephone, however, was a bureaucratic and expensive endeavor. 
Nonetheless, Entel was in the process of upgrading the telephone 
system, with Swedish technical assistance, through a network of 



148 



The Economy 



twenty ground satellite stations, a large satellite station in La Paz, a 
digital- switching system for La Paz and Santa Cruz and eventually 
other cities, and an expanded microwave system. In the 1980s, the 
telephone system also had limited capacity for facsimile, telex, and 
computer modem communications. That was expected to change 
by 1993, however, when the Caracas-based satellite communica- 
tions system, Condor, would begin to service the Andean region, 
including Bolivia, and provide television, telephone, telex, and data 
transmission to rural and urban areas throughout Bolivia. Several 
hundred post offices existed, many of which had telegraph capability. 
Bolivia was a member of the Andean Postal Union and the Inter- 
national Telecommunications Satellite Organization (Intelsat). 

Tourism 

Tourism was a small but growing activity in Bolivia with potential 
for greater foreign exchange earnings. The entry of tourists jumped 
from 22,250 in 1970 to 155,400 in 1980 but had fallen to 127,000 
by 1985, or about 1 percent of all tourism in Latin America and 
the Caribbean. Tourism was estimated to provide as much as 
US$50 million in foreign exchange. Over 300 hotels and scores 
of motels and tourist residences — with about 9,000 rooms and 
16,000 beds — provided accommodations for travelers. Latin Ameri- 
cans represented nearly half of all visitors, followed by Europeans 
and North Americans. A small domestic tourist industry also 
existed. Major tourist attractions were the country's snow-covered 
mountains, Lake Titicaca, pre-Inca ruins at Tiwanaku (Tiahuanaco), 
the vast tropical areas, remote national parks, sightseeing on the 
national railroad, and the Indian cultures. The government's Boliv- 
ian Institute of Tourism (Instituto Boliviano de Turismo) promoted 
Bolivian tourism by emphasizing the nation's history and culture, 
as well as its beauty and varied terrain. 

Foreign Economic Relations 
Foreign Trade 

In the late 1980s, Bolivia's pattern of trade was in a state of tran- 
sition. Since the middle of the sixteenth century, Bolivia had de- 
pended on only a few exports to generate the foreign exchange 
necessary to import the goods and services that the country did 
not make or provide. The volatility in world prices of these export 
commodities, however, made economic planning difficult and 
generated frequent unstable economic cycles. 

Official exports in 1987 stood at US$569 million, the lowest level 
in the 1980s up to that year (see table 10, Appendix). Reports in 



149 



Bolivia: A Country Study 

1988, however, indicated a rise to US$599 million, which was still 
low compared with levels registered earlier in the decade. Exports 
were severely hurt by depressed commodity prices and the struc- 
tural changes that those price movements caused in production. 
As a result of lower export prices, the country suffered declining 
terms of trade in the 1980s, often exporting more goods but for 
less total value. Exports in 1987, for example, purchased only 53 
percent of the amount earned by exports in 1980. A substantial 
shift occurred in the 1980s in the relative importance of tin and 
natural gas exports. As a percentage of total exports, tin declined 
from nearly 37 percent in 1980 to just over 12 percent in 1987. 
During the same period, natural gas increased from just over 21 
percent to nearly 44 percent of exports. Analysts contended, 
however, that a large portion of economic activity — the export of 
coca paste or cocaine and the smuggling of legal goods from 
Bolivia — was not reflected in official export figures. Estimates of 
coca-related exports ranged from US$600 million to US$1 billion. 
Analysts believed that tens of millions of dollars were earned in 
contraband smuggling. 

Trade policy after the world tin collapse of 1985 concentrated 
on making the external sector more market oriented and on diver- 
sifying the export base. The government emphasized import liber- 
alization through tariff reform, realistic exchange rates, aggressive 
import tariff collection, and the promotion of nontraditional agro- 
exports and minerals. The attempts to force Bolivian producers 
to compete with the prices of international products after years of 
protection, however, were often unsuccessful. The government also 
contracted the services of several West European surveillance com- 
panies to ensure that tariffs were paid. Import liberalization poli- 
cies helped cause a negative trade balance, which totaled US$188 
million in 1987. Nonetheless, the government hoped that market- 
oriented policies would cause exports to expand. After 1985 all 
export taxes were abolished, and constant devaluations of the 
Bolivian peso through a floating exchange rate helped lower the 
prices of exports and thus improve their competitiveness. The 
government also decreed tax rebates for exports and established 
an export promotion institute. 

Diversification, mainly toward agro-exports, was another key 
goal of trade policy. Nontraditional exports, composed mainly of 
sugar, coffee, soybeans, beef, and timber, reached a high of nearly 
19 percent of all exports in 1987. Observers doubted, however, 
that such exports would grow at the rapid pace many government 
officials expected because of longstanding structural obstacles and 
a lack of credit for producers. In addition, despite the rise of natural 



150 



A ski lodge building on Chacaltaya 
(elevation about 5, 500 meters) near La Paz 
Courtesy Harvey W. Reed 



151 



Bolivia: A Country Study 



gas and the decline of tin, minerals and hydrocarbons continued 
to represent the overwhelming percentage of legal exports. 

Total official imports in 1987 reached just over US$777 million, 
the highest level in the decade since the 1981 figure of US$918 mil- 
lion (see table 11, Appendix). Although the 1988 figure registered 
a drop to about US$700, the 1987 figure masked the reality of an 
import demand in excess of US$1 billion, as contraband imports 
were placed at between US$500 million and US$600 million. With 
the introduction in August 1985 of a uniform tariff of 20 percent, 
imports increased. The tariff for capital goods decreased to 10 per- 
cent in 1988, a level that was scheduled to be uniform once again 
by 1990. Unlike the country's exports, the composition of imports 
changed only slightly as a result of the restructuring of the econ- 
omy after 1985. Capital goods, mostly machinery and equipment 
for industry and transport, accounted for nearly 42 percent of all 
imports in 1987, followed by raw materials and intermediate goods, 
dedicated primarily to import-intensive manufacturing (40 percent) 
and consumer goods (16 percent). 

Bolivia's trade was increasingly integrated into neighboring Latin 
American economies. In 1987 about 51 percent of all exports went 
to Argentina; natural gas accounted for most of that total. During 
the 1980s, Brazil surpassed the United States as the leading sup- 
plier of Bolivian imports. Bolivia was active in groups that promoted 
regional economic cooperation, such as ANCOM and the Latin 
American Integration Association (Asociacion Latinoamericana de 
Integracion — ALADI), the successor to the Latin American Free 
Trade Association (LAFTA). ANCOM had been established in 
1969 by Bolivia, Colombia, Chile, Ecuador, and Peru, which en- 
dorsed the sectoral industrial development programs in the pact's 
Cartagena Agreement. After Chile withdrew its membership in 
1976, ANCOM members generally collaborated on most issues. 
A major exception, however, was the issue of foreign investment, 
which was introduced by Ecuador and continued to jeopardize 
regional economic harmony (see Foreign Relations, ch. 4). With 
the election of the Paz Estenssoro government in 1985, Bolivia 
sought to relax ANCOM 's investment code. Bolivia received pri- 
ority treatment in ANCOM as its poorest member. In the 1980s, 
Bolivia also developed a growing interest in ALADI. 

Balance of Payments 

Three major factors — reduced access to international capital, 
domestic economic instability, and a drop in commodity prices — 
greatly disrupted Bolivia's balance of payments during the 1980s. 
As the structural weaknesses of the economy became more apparent 



152 



The Economy 



in the late 1970s, foreign banks scaled back their loan commitments. 
This trend was exacerbated by the general economic chaos that 
reigned during the first half of the 1980s. Recession and hyper- 
inflation discouraged new foreign direct investment, and policies 
that attempted to eliminate the predominance of the United States 
dollar in the financial sector spurred capital flight. Weakening com- 
modity prices shrank export revenues, causing a negative trade 
balance after 1985. Fortunately, however, multilateral and bilateral 
sources provided Bolivia with generous amounts of financing to 
meet its shortfalls and allowed it to sustain international economic 
transactions. 

Bolivia experienced persistent deficits in its current account dur- 
ing the 1980s, primarily as a result of a large chronic debit on the 
service portion of this account and significant trade imbalances after 
1985 (see table 12, Appendix). From 1980 to 1985, the current ac- 
count deficit equaled approximately 10 percent of GDP, or about 
three times the shortfall of the previous fifteen years. The last cur- 
rent account surplus occurred in 1973 and was the result of oil price 
windfalls. In 1987 the negative balance on the current account stood 
at nearly US$488 million, more than any other year in the decade. 
Although trade was expected to improve slowly, the outlook for 
a reversal of the current account deficit was not bright. 

With the decline in new foreign direct investment and private 
financing in the early 1980s, the capital account was negative every 
year from 1982 to 1987, except for 1984. Overseas investment in 
Bolivia from 1983 to 1987 averaged a mere US$1 1 million, a con- 
sequence of the poor macroeconomic climate, unclear positions on 
regional investment rules, the lack of a new national investment 
code, and an unfavorable history of relations with the foreign pri- 
vate sector. The only significant inflows into the economy during 
the 1980s were from international sources like the IMF and the 
World Bank, along with multilateral and bilateral creditors, whose 
balance of payments support propped up the economy. Although 
foreign exchange reserves dropped in the 1980s, special financing 
from international public institutions and the nonpayment of 
Bolivia's commercial debt after 1984 limited the degree of damage. 
Central Bank officials reported that gross reserves at the end of 
1988 totaled US$404 million and net reserves, US$181 million. 
Bolivia, however, did maintain over US$300 million in gold 
reserves, and those reserves were mounting. 

Debt 

Bolivia was the first country during the Great Depression to 
default on its foreign debt, and not until 1971 did the government 



153 



Bolivia: A Country Study 

return to international capital markets for financing. External 
financing, mostly newly generated petrodollars, quadrupled dur- 
ing the 1970s as political stability and economic growth improved 
Bolivia's creditworthiness. As foreign financing dried up in 1978, 
foreign banks also negatively reassessed Bolivia's ability to service 
more debt. In 1984 Bolivia became the first Latin American country 
to declare an official moratorium on debt payments to commer- 
cial banks, and it continued to withhold payment through 1988. 
Bolivia, however, maintained a good repayment record with offi- 
cial creditors, such as the IMF and World Bank, recognizing they 
were its lenders of last resort. 

By the late 1980s, Bolivia had accrued one of the highest per 
capita debts in Latin America. The country's total external debt 
amounted to US$4.6 billion in 1986, or slighdy more than its GDP 
for that year. Its debt-servicing requirements amounted to US$161 
million in 1986, creating a debt-service ratio (debt as a percentage 
of exports) of approximately 24 percent. Fortunately, about 90 per- 
cent of the country's debt was long-term liability. The structure 
of the country's debt changed drastically during the decade. Offi- 
cial multilateral and bilateral creditors composed 42 percent of total 
debt in 1980, compared with over 75 percent by 1988. Of the eigh- 
teen most heavily indebted developing countries tracked by the 
World Bank, Bolivia had the second lowest percentage of its debt 
with official creditors. The rapid changes in the structure of the 
liability were caused by the discontinuation of new private loans, 
large increases in official lending, and the government's purchases 
of its private debt in 1988. Argentina and Brazil, two of the de- 
veloping world's largest debtor nations, were the country's largest 
bilateral lenders. 

Despite unsteady relations with its commercial creditors, Bolivia 
achieved at least six debt reschedulings or deferments from 1980 
to 1988. These agreements typically included longer grace periods, 
extended repayment schedules, and, occasionally, lower interest 
rates. As the Bolivian treasury reportedly neared depletion during 
the 1980s, such measures had become absolutely necessary in order 
to maintain the country's solvency. Most of the reschedulings oc- 
curred in the multilateral forum of the Paris Club (see Glossary), 
a clearinghouse for private and certain public debt negotiations. 
Outside the Paris Club framework, Bolivia also rescheduled its 
US$900 million bilateral debt with Argentina in 1987 on very 
favorable terms, including a fifteen-year grace period and a twenty- 
five-year repayment timetable. According to Bolivia's minister of 
finance, the reschedulings reduced the country's debt- service bur- 
den by 50 percent beginning in 1988. 



154 



The Economy 



In addition to rescheduling, the Paz Estenssoro government 
sought to reduce its debt through complex international financial 
schemes. In 1988 Bolivia negotiated a debt-purchase arrangement 
with commercial creditors, many of which had already written off 
or substantially reduced the value of the loans on their books. In 
order to forestall a complete loss on their loans, bankers agreed 
to a program whereby the Bolivian government purchased its debt 
on secondary markets, where such liabilities are traded, for 1 1 per- 
cent of its face value, or at an 89 percent discount of the original 
debt. A special escrow fund administered by the IMF and financed 
by donations from West European and Latin American govern- 
ments enabled Bolivia to pay for the discounted debt. By June 1988, 
Bolivia had acquired nearly 50 percent of its private debt through 
buybacks and sought to obtain the remainder of the debt by the 
end of 1989. Another debt-management approach adopted by Paz 
Estenssoro, a debt-for-equity swap, allowed commercial banks to 
exchange a predetermined value of the debt for equity in a Bolivian 
enterprise, usually a semiautonomous one slated for privatization. 
The government's third debt-reduction approach, a much smaller 
operation, allowed a United States environmental organization to 
purchase US$650,000 of Bolivian debt at an 85 percent discount 
in a "debt-for-nature" swap and receive B250,000 to manage a 
135,000-hectare wildlife preserve in Beni Department. 

As a result of the country's aggressive debt-management pro- 
gram, Bolivia actually lowered its liability in 1988. Furthermore, 
it became the only Latin American nation to avoid exporting cap- 
ital during the debt crisis. Instead, it obtained more external financ- 
ing, although solely from public sources, than it paid out in interest 
and principal on its debt. Debt management, however, remained 
a controversial political issue, especially for critics of the military 
governments in the 1970s that accumulated the bulk of the liabili- 
ties. Restructuring or repayment of that debt was perceived by some 
as legitimizing gross economic mismanagement. The debt was con- 
sidered negotiable enough that Roberto Suarez Gomez, Bolivia's 
reputed "King of Cocaine," even offered to pay off the country's 
multibillion-dollar debt in the early 1980s to avoid extradition (see 
The Security Forces, ch. 5). 

Foreign Assistance 

As one of the two poorest countries in South America, Bolivia 
received generous amounts of multilateral and bilateral foreign as- 
sistance. The most important multilateral lenders were the IMF, 
the World Bank, and the IDB, all of which furnished mostly con- 
cessionary loans. The IMF and the World Bank provided several 



155 



Bolivia: A Country Study 

hundred million dollars to the Bolivian government for the restruc- 
turing of the financial system, debt management, balance of pay- 
ments support, the Emergency Social Fund, and various other 
projects. In 1988 Bolivia received US$187 million in World Bank 
funding under the Enhanced Structural Adjustment Facility, a new 
loan mechanism available only to the poorest members of the bank. 
The IDB, another major multilateral donor, has lent the country 
in excess of US$1 billion since the early 1960s for projects in infra- 
structure, mining, industry, agriculture, energy, health, education, 
and other fields. In the late 1980s, the IDB's project funding focused 
on repair to the Cochabamba-Santa Cruz highway, export financ- 
ing, small farming projects, tax reform, and the informal sector. 
Other multilateral organizations present in Bolivia were the Andean 
Development Corporation, the United Nations, and the Organi- 
zation of American States. 

Bilateral overseas development agencies in the first half of the 
1980s granted Bolivia an average of US$170 million a year, or about 
6 percent of GDP, and the United States on average provided a 
quarter of grant monies. As with multilateral agencies, bilateral 
agencies responded favorably to the orthodox policy reforms at- 
tempted by the Paz Estenssoro government. The United States, 
which had provided US$1 . 18 billion from 1946 to 1986, remained 
Bolivia's single most important bilateral donor in the late 1980s. 
AID transferred over US$61 million to the country in 1988 and 
earmarked US$77 million for 1989. Over half of that assistance 
was directed at PL-480 Food for Peace programs, and another third 
went into specific development projects. An increasing percentage 
of assistance was being targeted for balance of payments support 
in the form of Economic Support Funds. AID supported market- 
oriented policy reforms, assisted in narcotics control and coca eradi- 
cation efforts, and funded health, education, and informal sector 
projects to mitigate the effects of the economic crisis. Other United 
States agencies, including the Drug Enforcement Administration, 
the Department of Defense, and the Inter- American Foundation, 
also provided economic assistance to the country. The Peace Corps, 
which was expelled by the Bolivian government in 1971, hoped 
to return in the early 1990s. Japan, Canada, and most West Eu- 
ropean countries also extended bilateral assistance. The Soviet 
Union provided Bolivia with an estimated US$204 million from 
1954 to 1987. 

* * * 

Definitive, book-length studies of the Bolivian economy in the 
1980s were unavailable in early 1989. The literature tended to focus 



156 



The Economy 



on labor unions and the history of tin. Nor were there any com- 
prehensive, book-length studies of important economic develop- 
ments, such as the 1985 tin-market crash and the 1985 NPE. The 
most comprehensive work on the tin industry, The Economics of Tin 
Mining in Bolivia by Mahmood Ali Ayub and Hideo Hashimoto, 
was written before the crash. An informative monograph on the 
collapse is the London-based Latin America Bureau's The Great Tin 
Crash by John Crabtree, Gavan Duffy, and Jenny Pearce. A use- 
ful monograph on the NPE is Bolivia } s Economic Crisis by Juan 
Antonio Morales and Jeffrey Sachs. There are also few in-depth 
studies on the important revenue-producing hydrocarbon and coca 
industries. Data on Bolivia's coca eradication and other antidrug 
efforts can be found in the periodic International Narcotics Control Stra- 
tegy Report, published by the United States Department of State's 
Bureau of International Narcotics Matters, and in Drug Control, 
published by the United States General Accounting Office. Among 
the few journal articles on the Bolivian economy is James M. 
Malloy's "Bolivia's Economic Crisis." 

A definitive source of economic data on Bolivia also was lacking 
in early 1989, and, as with many developing nations, data varied 
greatly. Useful Bolivian sources include publications of the Cen- 
tral Bank and the Ministry of Planning and Coordination's Na- 
tional Statistical Institute, such as the annual Bolivia en cifras. The 
best English-language sources include the IMF's International Finan- 
cial Statistics Yearbook, 1988; the World Bank's Annual Report, 1988; 
the IDB's discussion of Bolivia in Economic and Social Progress in Latin 
America; and Country Profile: Bolivia, 1988-89, published by the 
London-based Economist Intelligence Unit. Useful monthly news- 
letters include Latin America Regional Reports and Latin American 
Monitor. (For further information and complete citations, see Bib- 
liography.) 



157 



Chapter 4. Government and Politics 



Symbolism on the back of the Great Idol of Tiwanaku 



IN 1989 VICTOR PAZ ESTENSSORO stepped down as presi- 
dent of Bolivia and on August 6 handed over power to the third 
democratically elected leader of the 1980s. Paz Estenssoro presided 
over four years of economic and political stability following two 
decades of military rule and nearly six years of a tumultuous tran- 
sition to democracy. 

When Paz Estenssoro assumed office on August 6, 1985, he in- 
herited a society besieged by the most profound political and eco- 
nomic crisis in its history. Years of military rule had destroyed the 
nation's political institutions and eroded democratic traditions. The 
economy, in turn, had experienced a catastrophic downturn owing 
to years of mismanagement, the exhaustion of a state-centered eco- 
nomic development strategy, and extreme dependence on a single 
export commodity — tin. By 1985 inflation had reached 24,000 per- 
cent, and growth rates were declining steadily by over 10 percent 
annually. 

To revive an agonizing nation, Paz Estenssoro, the old politi- 
cian who had led the 1952 Revolution, transcended electoral and 
party-based politics. To address the economic crisis, he commis- 
sioned a team of young technocrats. The resulting New Economic 
Policy imposed a severe austerity program that stabilized the econ- 
omy and fundamentally transformed Bolivia's development strat- 
egy- 

The political crisis, characterized by a recurrent conflict between 
the executive and legislative branches, required equally innova- 
tive answers. Soon after the announcement of the New Economic 
Policy, Paz Estenssoro and his Nationalist Revolutionary Move- 
ment signed the Pact for Democracy with former General Hugo 
Banzer Suarez's Nationalist Democratic Action party. With the 
Nationalist Democratic Action party's support in the National Con- 
gress, the New Economic Policy and related legislation were im- 
plemented successfully. The Pact for Democracy provided the 
needed support for implementation of the government's economic 
policy, as well as the basis for four years of political stability. 

Although originally envisioned as a long-term agreement that 
could establish the foundations of Bolivian democracy, the Pact 
for Democracy proved to be a temporary marriage of convenience 
that the partners renounced owing to irreconcilable differences. By 
February 1989, the Pact for Democracy had collapsed, mainly be- 
cause the campaign for the May elections had accentuated the 



161 



Bolivia: A Country Study 

differences between the two parties. Most Bolivian analysts hoped 
that the three years of the Pact for Democracy that enabled the 
New Economic Policy legislation to go forward were enough to es- 
tablish the basis for positive growth in the 1990s. Each of the three 
leading presidential candidates in the May elections committed him- 
self to the basic premises of the New Economic Policy. 

Still, the most complex issue in Bolivian politics in 1989 remained 
the question of governability. The Pact for Democracy enabled Paz 
Estenssoro and the Nationalist Revolutionary Movement to govern 
for four years. With parties focused on the immediate task of get- 
ting elected, the more serious task of establishing the foundations 
of a stable political system was set aside. The key issue was whether 
or not political parties would be able to transcend the mundane 
worries about electoral politics to lay the groundwork for democratic 
rule. Their failure threatened to precipitate another round of mili- 
tary intervention. 

Constitutional Background 

The Constituent Assembly that founded Bolivia in 1825 wrote 
the nation's first constitution establishing a centralized government 
with executive, legislative, and judicial branches. Based on the 
United States Constitution and borrowing a few premises from the 
French Republic, the first charter adopted liberal and representa- 
tive democracy granting the congress autonomy and policy-making 
prerogatives. This constitution, however, was never adopted. 

On November 26, 1826, the Bolivarian constitution, written in 
Lima by the liberator Simon Bolivar Palacios, replaced the origi- 
nal document and instituted a fourfold separation of powers among 
a lifetime presidency, an independent judiciary, a tricameral con- 
gress, and an electoral body. The tricameral congress comprised 
the Senate and the Chamber of Tribunes, whose members had fixed 
terms, as well as a Chamber of Censors, whose members served 
for life. Theoretically, the Senate was responsible for codifying laws 
and reorienting church and court officials, the Chamber of Tri- 
bunes possessed general legislative powers, and the Chamber of 
Censors had oversight powers that included impeachment of mem- 
bers of the executive. In reality, the legislature's key functions were 
to name the president and to approve a list of successors submit- 
ted by the president. One of the long-lasting effects of the Bolivar- 
ian constitution was the establishment of an executive-based system. 
The Bolivarian constitution reflected the Spanish tradition of 
bureaucratic patrimonialism in which power rested in the execu- 
tive branch. Historians have argued retrospectively that Bolivar's 



162 



Government and Politics 



constitution suited the nation's political structure better than the 
liberal constitutions that followed. 

In many ways, the Bolivarian constitution reflected Bolivar's 
uneasiness about mob rule. Like the founding fathers of the United 
States, Bolivar considered necessary the prevention of rule by the 
masses. As a result, the franchise was extended only to those lit- 
erate in Spanish who either possessed property then worth 400 
bolivianos or engaged in an art, in a science, or in some other 
remunerative position. Domestic and personal servants were also 
denied the franchise. In short, voting rights were limited to a very 
small and privileged elite. Voting qualifications and restrictions 
remained until universal suffrage was adopted during the 1952 
Revolution. 

Mostly, however, the Bolivarian constitution reflected Bolivar's 
distrust of the privileged elite that inherited Upper (Alto) Peru from 
Spain. Bolivar feared that rival elite factions would wage battle 
against each other for control over the new nation and became con- 
vinced that the best way to prevent instability and chaos was to 
institutionalize a strong, centralized, and lifetime presidency. 

In spite of Bolivar's foresight, the Bolivarian constitution did 
not last long because of the great disparity that existed between 
the national aspirations of the state and its effective power over 
Bolivia's disparate regions and population. Between 1825 and 1880, 
Bolivian political life was dominated by a series of quasi-military 
leaders, known as caudillos, who had emerged with the collapse 
of the Spanish Empire. Within the context of economic crisis, war- 
ring caudillos, and a semifeudal social structure, constitutions and 
the national government became prizes to be captured by one or 
another caudillo. 

Under the presidency of General Andres de Santa Cruz y Cala- 
humana, a new constitution was adopted on August 31 , 1831 . The 
new constitution introduced bicameralism, dividing the body be- 
tween the Chamber of Senators (Senate) and the Chamber of 
Deputies elected by proportional representation. Annual sessions 
for the National Congress (hereafter, Congress) were to run be- 
tween sixty and ninety days. Although the president was given the 
power to dissolve Congress, the new constitution abolished the life- 
time presidency and limited the president to renewable four-year 
terms. Despite these limitations, however, presidential power ac- 
tually increased during the presidency of Santa Cruz, and the trend 
toward greater concentration of power in the executive continued 
throughout Bolivia's history. 

Under the short-lived Peru-Bolivian Confederation of 1836-39, 
Santa Cruz promulgated a new constitution that basically applied 



163 



Bolivia: A Country Study 

the principles of the 1831 charter to the alliance (see Construction 
of Bolivia: Bolivar, Sucre, and Santa Cruz, ch. 1). The end of the 
confederation motivated Santa Cruz to institutionalize the strong 
executive model embodied in the 1831 charter. Because the presi- 
dent was given the power to dissolve the legislature, Congress was 
condemned to a passive and submissive role. 

For the next forty-two years, Bolivia was subjected to the whims 
of caudillos who dictated constitutional charters almost as regu- 
larly as changes of government occurred. Between 1839 and 1880, 
six constitutions were approved by the legislative power. Except 
for the constitution of 1839, which limited presidential power, the 
constitutions promulgated under Jose Ballivian y Segurola (1843), 
Manuel Isidoro Belzu Humerez (1851), Jose Maria de Acha 
Valiente (1861), Mariano Melgarejo Valencia (1868), and Agustm 
Morales Hernandez (1871) further concentrated power in the hands 
of the executive. As a rule, during this era Congress responded 
to the demands of whatever caudillo was in power. 

Caudillo politics came to an end after the War of the Pacific 
(1879-83), in which the combined forces of Bolivia and Peru 
suffered a humiliating defeat against Chile's armed forces (see War 
of the Pacific, ch. 1). The end of the war gave rise to a new min- 
ing elite oriented to laissez-faire capitalism. Aided by the failure 
of Bolivia's armed forces in the war effort, this new elite was able 
to design a new civilian regime of "order and progress." 

In 1880 Bolivia's most durable constitution was approved; it was 
to remain in effect for the next fifty-eight years. Under this consti- 
tution, bicameralism was fully adopted, and the legislative power 
became an important arena for political debate. During this period, 
Bolivia achieved a functioning constitutional order complete with 
political parties, interest groups, and an active legislature. The coun- 
try was also a prime example of a formal democracy with legally 
limited participation. Literacy and property requirements were still 
enforced to exclude the Indian population and the urban working 
class from politics. Political life was reserved for the privileged and 
a minuscule upper class. 

The basic premises of representative democracy introduced in 
1880 still prevailed in 1989. Specifically, congressional oversight 
prerogatives over executive behavior were introduced by law in 
1884 when Bolivia emerged from the War of the Pacific. The Law 
Governing Trials of Responsibilities was to become an integral part 
of Bolivia's restricted democracy. 

The era of political stability, which paralleled the integration of 
Bolivia into the world economy through the export of tin, ceased 
with the end of the tin-export boom and the overthrow of President 



164 



Government and Politics 



Daniel Salamanca Urey (1931-34). One of the legacies of this period 
was an extremely stratified pattern of social relations that was to 
affect Bolivia's political structure. In particular, the middle class 
became dependent on the state for employment as the upper class 
monopolized hard sources of wealth. As the economy plummeted, 
competition for scarce jobs increased. The result was a discontented 
and jobless middle class. In this context, political conflict became 
a struggle between factions led by elite leaders and middle-class 
followers. 

The economic crisis of the 1930s and the disastrous Chaco War 
(1932-35) exacerbated social tensions (see The Chaco War, ch. 1). 
The effects of the war would in turn have a dramatic effect on Boliv- 
ian political life and its institutions. Between 1935 and 1952, middle- 
class reformist efforts converged into populist movements led by 
both military officers and middle-class civilian intellectuals (see 
Prelude to Revolution, 1935-52, ch. 1). Under Colonel German 
Busch Becerra (1937-39), a constituent assembly approved reforms 
in 1938 that were to have a lasting and profound impact on Boliv- 
ian society. Of greatest significance were changes that altered the 
pattern of relations between state and society. According to its pro- 
visions, human rights outweighed property rights, the national in- 
terest in the subsoil and its riches predominated, the state had a 
right to intervene in economic life and to regulate commerce, work- 
ers could organize and bargain collectively, and educational facil- 
ities for all children were mandated. The labor provision helped 
establish the basis for political parties by allowing the formation 
of miners' and peasants' unions that eventually played central roles 
in the 1952 Revolution. 

Bolivia's constitution was again reformed in 1944 during the 
presidency of Colonel Gualberto Villarroel Lopez (1943-46), 
another populist reformer. The principal changes included suffrage 
rights for women, but only in municipal elections, and the estab- 
lishment of presidential and vice presidential terms of six years 
without immediate reelection. Reforms undertaken by military- 
populist governments, however, were partially rolled back follow- 
ing the overthrow and assassination of Villarroel in 1946. In 1947 
a new constitution reduced the presidential term to four years and 
increased the powers of the Senate. 

In retrospect, it is clear that the post-Chaco War reformist efforts 
increased the role of the state, especially in terms of redressing social 
and economic grievances. The constitutions of this period reflected 
the rise of movements and groups that were to dominate Bolivian 
politics for the next forty years. For example, the Nationalist Revolu- 
tionary Movement (Movimiento Nacionalista Revolucionario — 



165 




166 



I 




Bolivia: A Country Study 

MNR) espoused a broad multiclass alliance of workers, peasants, 
and middle-class elements to do battle with the antinational forces 
of the mining oligarchy and its foreign allies. It went on to con- 
duct the 1952 Revolution, and in 1985 the MNR was back in power 
with Paz Estenssoro, its founder and leader, as president. Although 
the 1952 Revolution fundamentally transformed Bolivian society, 
a new political order was never fully implemented. Between 1952 
and 1956, factions of the MNR debated alternative and novel modes 
of political organization, including proposals to implement a work- 
ers' assembly. By 1956, however, the 1947 constitution had been 
ratified. Apart from a powerful labor movement, organized as the 
Bolivian Labor Federation (Central Obrera Boliviana — COB), the 
MNR failed to create new institutions capable of channeling and 
controlling the demands of the groups mobilized by the 1952 Revo- 
lution (see The Unfinished Revolution, ch. 1). 

The 1961 constitution institutionalized the gains of the 1952 
Revolution by adopting universal suffrage, the nationalization of 
the mines, and agrarian reform. Factional disputes within the 
MNR, rooted in demands for access to state employment, under- 
mined the party's capacity to carry out further reforms. In fact, 
the 1961 constitution served mainly the interests of Paz Estens- 
soro 's faction of the MNR by providing for his reelection in 1964. 

The overthrow of the MNR by General Rene Barrientos Ortuno 
(president, 1964-65; copresident, May 1965-January 1966; and 
president, 1966-69) in 1964 initiated the contemporary era in Boliv- 
ian constitutional development (see The Presidency of Barrientos, 
ch. 1). After calling elections in 1966 and invoking the 1947 con- 
stitution, Barrientos attempted to force through Congress a new 
corporatist charter. Because he sought democratic legitimacy, 
however, he was forced to give up his original project in favor of 
a constitution rooted firmly in the liberal democratic tradition that 
had inspired the authors of the 1880 charter. 

Under the terms of the Constitution of 1967, Bolivia is a uni- 
tary republic that retains a democratic and representative democ- 
racy. Article 2 stipulates that sovereignty resides in the people, that 
it is inalienable, and that its exercise is delegated to the legislative, 
executive, and judicial powers. The functions of the public power — 
executive, legislative, and judicial — cannot be united in a single 
branch of government. Although the Constitution of 1967 recog- 
nizes Roman Catholicism as the official state religion, it also guaran- 
tees to all other faiths the right to worship publicly. In theory, the 
people govern through their representatives and through other 
authorities established by law. The Constitution of 1967 became 
known to most Bolivians only in the 1980s because, for all practical 



168 



Government and Politics 



purposes, it was in effect only until 1969 when a coup by General 
Alfredo Ovando Candfa (copresident, May 1965-January 1966, 
and president, January- August 1966 and 1969-70) overthrew the 
civilian regime. Between then and 1979, the Constitution of 1967 
was given only lip service by the military rulers who governed 
Bolivia. 

Between 1978 and 1989, four general elections were held, and 
Bolivia enjoyed a stable, elected, civilian democratic government 
under the terms of the Constitution of 1967. Nevertheless, although 
the Constitution of 1967 had continued the strong executive tradi- 
tion, the political system had not yet developed strong party or- 
ganizations capable of establishing viable and long-term ruling 
coalitions. 

Governmental Structure 
The Executive 

Executive power resides in the president of the republic and his 
ministers of state. The ministers of state conduct the day-to-day 
business of public administration. In 1989 the Council of Ministers 
included sixteen ministries (see fig. 11). In addition to the Coun- 
cil of Ministers, the president headed the National Economic and 
Planning Council (Consejo Nacional de Economfa y Planificacion — 
Coneplan), the National Council for Political and Social Affairs 
(Consejo Nacional Politico y Social — Conapol), and the National 
Security Council (Consejo Nacional de Seguridad — Conase). 

The president and vice president are chosen through direct elec- 
tions to a four-year term. To win an election, a candidate must 
secure a majority of the popular vote. If a majority is not achieved, 
Congress selects the next president from among the top three can- 
didates. This reliance on Congress, rather than on a second round 
of elections, has contributed greatly to the instability of democrat- 
ically elected executives. Because of a recurring executive-legislative 
split, elections produced governments that had only formal power. 
Until 1985 real power, or the effective capacity to rule, had eluded 
democratically elected presidents. 

Under the Constitution, reelection of the incumbent is not per- 
mitted; however, after four years the previous president may again 
run for office. Similarly, an incumbent vice president may not run 
for president until four years after the end of his term. In 1985, 
however, a pact between the major political parties allowed Vice 
President Jaime Paz Zamora to run for the presidency. 

To become president, a person must be at least thirty- five years 
of age, literate, a registered voter, and the nominee of a political 



169 



Bolivia: A Country Study 



PRESIDENT 



EXECUTIVE 
BRANCH 



NATIONAL 
ECONOMICS 
AND 
PLANNING 
COUNCIL 
(Coneplan) 1 



NATIONAL 
SECURITY 
COUNCIL 
(Conase) 3 



NATIONAL 
COUNCIL FOR 

POLITICAL 
AND SOCIAL 
AFFAIRS 
(Conapol) 2 



VICE 
PRESIDENT 



COUNCIL OF 
MINISTERS 



AGRICULTURE, 
CAMPESINO AFFAIRS, AND 
LIVESTOCK AFFAIRS 



EDUCATION AND CULTURE 



ENERGY AND 
HYDROCARBONS 



FINANCE 



FOREIGN AFFAIRS 
AND WORSHIP 



HOUSING AND 
URBAN AFFAIRS 



TRANSPORT AND 
COMMUNICATIONS 



SECRETARY GENERAL 
OF THE PRESIDENCY 



LEGISLATIVE 
BRANCH 



JUDICIAL 
BRANCH 



NATIONAL 
CONGRESS 



SUPREME 
COURT OF 
JUSTICE 



SENATE 



CHAMBER 

OF 
DEPUTIES 



SUPERIOR 
DISTRICT 
COURTS OF 
JUSTICE 



LOWER 
COURTS 



INDUSTRY, COMMERCE, 
AND TOURISM 



COMPTROLLER 
GENERAL 



NATIONAL DEFENSE 



INTERIOR, MIGRATION, 
AND JUSTICE 



DECENTRALIZED 
AND AUTONOMOUS 
ENTERPRISES 



LABOR AND LABOR 
DEVELOPMENT 



MINING AND METALLURGY 



PLANNING AND 
COORDINATION 



SOCIAL SERVICES AND 
PUBLIC HEALTH 



WITHOUT PORTFOLIO 



Coneplan -- Consejo Nacional de Economia y Planificacion. 



2 Conapol -- Consejo Nacional Politico y Social. 

3 Conase -- Consejo Nacional de Seguridad. 



Figure 11. Governmental System, 1989 



170 



Government and Politics 



party. Members of the armed forces on active duty, Roman Cath- 
olic clergy, and ministers of other religions may not run for office. 
Blood relatives and relatives to the second degree by affinity of the 
incumbent president and vice president are ineligible to run for 
the presidency. Incumbent ministers of state who seek the execu- 
tive office must resign at least six months before election day. 

By tradition and constitutional law, the president is a strong ex- 
ecutive. Conducting foreign relations, making economic policy, 
enforcing and regulating laws, negotiating treaties and ratifying 
them after prior approval by Congress, appointing officials, com- 
manding the armed forces, and preserving and defending the public 
order are all prerogatives guaranteed the chief executive under the 
Constitution of 1967. In emergency situations, such as internal tur- 
moil or international war, the president has the power to call a state 
of siege. 

The power of appointment enables the president to exercise con- 
trol over the large number of public servants at all levels of govern- 
ment. The president appoints the ministers of state, members of 
the bureaucracy, and prefectos (prefects) of departamentos (depart- 
ments). From lists submitted by the Senate, the president appoints 
the comptroller general, the attorney general, the national superin- 
tendent of banks, and the heads of state enterprises. As captain 
general of the armed forces, the president has the power to appoint 
the commander in chief of the armed forces and the commanders 
of the navy, army, air force, and public safety. 

The executive branch also included a number of decentralized 
institutions and autonomous enterprises, such as the Social Secu- 
rity Institute (Colegio Nacional de Seguridad Social — CNSS), the 
Mining Corporation of Bolivia (Corporacion Minera de Bolivia — 
Comibol), the Bolivian State Petroleum Enterprise (Yacimientos 
Petroliferos Fiscales Bolivianos — YPFB), the National Railroad 
Enterprise (Empresa Nacional de Ferrocarriles — Enfe), and the Na- 
tional Telecommunications Enterprise (Empresa Nacional de Tele- 
comunicaciones — Entel). The state also owned and operated Lloyd 
Bolivian Airline (Lloyd Aereo Boliviano — LAB; see Transporta- 
tion, ch. 3). 

One of the largest state enterprises, the Bolivian Development 
Corporation (Corporacion Boliviana de Fomento — CBF), grouped 
a number of smaller industries ranging from dairy products to 
matches. As a result of a decentralization program, control over 
the CBF was passed on to regional development corporations in 
1985. These were in turn given the task of selling enterprises to 
the private sector (see Growth and Structure of the Economy, ch. 3). 



171 



Bolivia: A Country Study 



The dependent nature of Bolivia's middle class and the lack of 
a broad economic base often resulted in state bureaucracies' being 
used for political gain. Because of the small size of private indus- 
try, the middle class coveted positions in the state bureaucracy. 
As a result, competition for a limited number of bureaucratic po- 
sitions frequently engendered political conflict. Government re- 
mained a prized commodity struggled over by factions made up 
of leaders drawn from the elite and ambitious personal followers 
drawn from the middle class. 

By the mid-1980s, the state had become a large but extremely 
weak apparatus. Approximately 220,000 public employees bloated 
the bureaucracy, and the prevalence of patronage prevented the 
dismissal of inefficient employees. This huge payroll seriously in- 
flated the public deficit. 

Reforms undertaken since 1985 under the guise of the New Eco- 
nomic Policy (Nueva Polftica Economica — NPE) reduced the size 
of the state sector by privatizing or decentralizing state enterprises. 
To reduce public spending, 20,000 miners from Comibol were laid 
off (see Structure of the Mining Industry, ch. 3). Through the re- 
structuring of state enterprises, the government also fired employees 
in YPFB and other bureaucracies. Critics of the reforms noted, 
however, that workers were dismissed instead of the government 
officials whose salaries were responsible for most of the increases 
in public spending. 

In 1989 the Integrated System of Financial Administration and 
Governmental Control (Sistema Integrado de Administracion Fi- 
nanciera y Control Gubernamentales — Safco), a program funded 
by the United States Agency for International Development (AID) 
and the World Bank (see Glossary), was introduced to monitor hir- 
ing and firing practices and to reduce corruption in the public sec- 
tor. The program's central objective was to make government 
bureaucracies efficient administrative entities. Reforms undertaken 
by Safco also sought to reduce the number of ministries in order 
to make the state apparatus leaner and more manageable. 

In early 1989, President Paz Estenssoro commanded a cabinet 
divided equally between politicians and technocrats. Old members 
of the MNR shared responsibilities with managers drawn from the 
private sector. Paz Estenssoro 's cabinet was credited with enforc- 
ing the rigid austerity aims of the NPE. With the economy creep- 
ing toward reactivation, the attempt to reduce the size of the public 
sector appeared to have succeeded. 

The Legislature 

Although Congress generally played a passive policy-making 
role, it was a major actor in national politics. Indeed, Congress 



172 



Government and Politics 



had elected every civilian ruler to take office from the late 1970s 
to 1985. 

Historically, Congress had been subordinated to the executive; 
the intention of the Constitution of 1967 was to consolidate a strong 
presidential system. Nonetheless, within the context of a multiparty 
system, the Constitution of 1967 provides important mechanisms 
that allow for a more influential and active Congress. Congress 
has the right to pass, abrogate, interpret, and modify all laws. A 
bill must be passed by the legislature and must be signed by the 
president to become a law. Although the president may veto a bill, 
Congress may override the veto with a two-thirds majority vote 
(see table 13, Appendix). 

The Constitution provides for a bicameral legislature: a Cham- 
ber of Deputies and a Senate. Every year, beginning on August 6 
(Independence Day), Congress meets in La Paz for 90 sessions; 
the number of sessions may be expanded to 120 if requested by 
the executive or if favored by a majority of members. Congress 
may also meet for extraordinary sessions to debate specific bills 
if requested by the executive and if favored by a majority of its 
members. 

Congress has twenty-two prerogatives, which can be divided 
broadly into its economic policy, foreign policy, and political powers. 
Congress's principal economic policy function is approval of the 
annual budget that the executive must submit to Congress before 
the thirtieth session. This constitutional requirement for approval 
has rarely been respected, however. In 1987 and 1988, Congress 
approved the budget for the first time since 1967, although not 
within the first thirty sessions. Because budgets often faced oppo- 
sition in Congress, governments usually approved them through 
executive decree. Congress also has the power to establish the mone- 
tary system and is responsible, in theory, for approving all economic 
policy. Development programs, for example, must be submitted 
to Congress, and any loans contracted by the government must 
also be approved by the legislature. 

Congress's foreign policy prerogatives primarily concern its 
power to approve all treaties, accords, and international agreements. 
Although this practice was not always respected in the late 1980s, 
Congress must also decide whether or not to allow foreign troops 
to travel through or operate in Bolivian territory. Moreover, Con- 
gress decides when Bolivian troops may travel abroad. 

Congress's political powers include the naming of justices of the 
Supreme Court of Justice and members of the National Electoral 
Court, as well as the right to create new provinces, cantones (cantons), 
and municipal districts. One of its most important prerogatives is 



173 



Bolivia: A Country Study 

to declare amnesty for political crimes. Its most significant power, 
however, is to resolve elections in which the winning candidate has 
not garnered a majority of the vote. 

Congress possesses wide-ranging oversight powers over execu- 
tive behavior. A single senator or deputy may call ministers and 
other members of the executive to testify through a procedure known 
as petition de informe oral (request for an oral report). If the report 
is unsatisfactory, the senator or deputy may convert a simple re- 
quest into an interpellation, which may be resolved only through 
a vote of confidence or a vote for censure. In Bolivian parliamen- 
tary tradition, a censured minister must resign and be replaced 
by the executive. A petition de informe escrito (request for a written 
report) may also be sent to the executive regarding specific poli- 
cies, events, and actions. The Senate or Chamber of Deputies may 
also call attention to problems and current issues through minutas 
de comunicacion (minutes of communication). 

Congress also has the power of specific indictment. For ajuicio 
de responsabilidades (malfeasance trial) before the Supreme Court of 
Justice, a two-thirds majority vote is required to indict individuals 
accused of wrongdoing while in office. In 1986 Congress indicted 
former dictator General Luis Garcia Meza Tejada (1980-81); in 
early 1989, he was being tried in absentia by the Supreme Court 
of Justice. 

In addition to shared powers, each chamber has specific respon- 
sibilities. The Chamber of Deputies elects justices of the Supreme 
Court of Justice from a list submitted by the Senate, approves the 
executive's requests for the declaration of a state of siege, and trans- 
mits to the president of the republic a list of names from which 
the latter must select the heads of social and economic institutions 
in which the state participates. The Senate hears accusations against 
members of the Supreme Court of Justice raised by the Chamber 
of Deputies; submits to the president a list of candidates for comp- 
troller general, attorney general, and superintendent of the national 
banking system; approves ambassadors; and approves rank pro- 
motions in the armed forces every year. 

Elected deputies and senators enjoy immunity from prosecution 
for the duration of their term; however, a two-thirds majority may 
retract this privilege from a specific legislator. In 1969, for exam- 
ple, owing to pressure from President Barrientos, Congress lifted 
the immunity from two deputies who had initiated a "responsibil- 
ities trial" against the president. This clearly confirmed the primacy 
of presidential power. 

Deputies are elected through universal suffrage based on a com- 
plex proportional representation system. A 1986 electoral law, used 



174 



Government and Politics 



for the first time in 1989, calls for the election of 130 deputies (see 
table 14, Appendix). Bolivia has adopted the Spanish tradition of 
electing suplentes (alternates) as well. Hence, every elected deputy 
has an alternate in the event of his or her death, resignation, or 
disability. Based on population density in 1980, the Chamber's 130 
seats were divided as follows among Bolivia's nine departments: La 
Paz, 28; Potosi, 19; Cochabamba, 18; Santa Cruz, 17; Chuquisaca, 
13; Oruro, 10; Tarija, 9; Beni, 9; and Pando, 7. 

Deputies are elected for four-year terms, with the entire mem- 
bership facing election every fourth year. To become a deputy, 
a person must be at least twenty-five years of age, a Bolivian by 
birth, a registered voter, have no outstanding penal charges, and 
not be a government employee, a member of the clergy, or a con- 
tractor for public works. 

Every legislative year, the Chamber of Deputies elects a new 
leadership. Its leadership comprises a president, two vice presidents, 
and five secretaries. The day-to-day operations of the chamber are 
the responsibility of an oficial mayor, or high official. Since 1982 
the leadership has reflected the chamber's party composition, 
although the political parties with the greatest number of seats con- 
trol the top three positions. 

Every new legislative year also carries with it the reordering of 
committee memberships. In 1989 the Chamber of Deputies had 
seventeen committees that reflected broadly the structure of the 
executive cabinet. Since 1982 the committees, which have five mem- 
bers each, also have reflected (with some exceptions) the political 
subdivisions of the chamber as a whole. Usually, committee chairs 
are reserved for members of the party in control of the chamber, 
but they may be used as bargaining tools. Because committee mem- 
berships are reorganized each year, seniority is a not a factor. Owing 
to the large number of political parties represented in the lower 
chamber, the process of approving bills in committee and in the 
house as a whole is a protracted exercise. 

The vice president of the nation is president of the Senate, as 
well as president of Congress. The Senate is composed of twenty- 
seven senators, three per department. The winning party in each 
department secures two senators, and the runner-up controls the 
third. This arrangement ensures minority representation in the 
upper house. Like the deputies, senators are elected for four-year 
terms. To become a senator, one must be at least thirty-five years 
old, a Bolivian by birth, a registered voter, and must not be a 
government employee, a member of the clergy, or a contractor for 
public works. As in the lower chamber, alternates are also elected. 



175 



Bolivia: A Country Study 

In August, at the beginning of a new legislative year, the Senate 
elects a president, two vice presidents, and four secretaries. Be- 
cause fewer parties are represented in this chamber, electing the 
leadership is usually a rapid and smooth process. 

Like the Chamber of Deputies, the Senate has seventeen com- 
mittees, and every legislative year a complete membership turnover 
takes place. Each committee must have five members drawn from 
every party represented in the chamber. In general, bills spend less 
time in committee in the Senate (and they are also approved more 
rapidly by the whole chamber) than in the Chamber of Deputies. 
This is largely because fewer political parties are represented in 
the Senate. 

Committees in both the Chamber of Deputies and the Senate are 
not specialized bodies, and attempts were not made to secure com- 
petent legislative support staff until the late 1980s. Advisers to the 
committees were selected more on the basis of political affiliation 
than on expertise. Committees were also plagued by the lack of an 
adequate library and reference service. The Senate library, which 
theoretically serves Congress, was woefully inadequate. Although 
every session was recorded on tape, an efficient congressional record 
service did not exist. The transcripts of the 1982-85 sessions, for 
example, did not become available until the late 1980s. 

A recurring problem in both chambers was the prevalence of 
obsolete rules of procedure dating back to the 1904-05 legislative 
year. Procedural rules have slowed the approval of bills and have 
contributed in large measure to making Congress's legislative func- 
tion obsolete. 

During congressional recesses, the Constitution provides for a 
comision de congreso (congressional commission) to be elected by the 
members of each chamber. Nine senators and eighteen deputies, 
including the president of each chamber and the vice president of 
the republic, are elected to this commission. 

The congressional commission ensures that the Constitution and 
civil rights are respected while Congress is not in session. It is also 
provided with the same executive oversight capacity as Congress. 
Through a two- thirds majority vote, the commission may convoke 
an extraordinary session of Congress. Moreover, in the case of a 
national emergency, it may authorize the president, by a two- thirds 
vote, to issue decrees that carry the full force of law. Finally, the 
commission may design bills to be submitted to Congress during 
the regular legislative year. 

The Judiciary 

The judicial system is divided into upper and lower levels with 
effective power resting in the Supreme Court of Justice. The 



176 



Government and Politics 



Supreme Court of Justice consists of a president and eleven minis- 
tros (justices) who serve in three chambers for civil, penal, and so- 
cial and administrative matters. Justices are elected for ten-year 
terms by the Chamber of Deputies from a list proposed by the 
Senate, and they cannot be reelected. To become a justice, a per- 
son must be a Bolivian by birth, have been a judge for ten years, 
be a lawyer, and meet all the requirements to become a senator. 

Under the Constitution of 1967, the Supreme Court of Justice 
has the power to determine the constitutionality of laws, decrees, 
and resolutions approved by the executive and legislative branches 
of government. Moreover, it serves as the arena for malfeasance 
trials of public officers, including the president, vice president, and 
ministers of state, for crimes committed while in office. 

The Senate elects members of the superior district courts of justice 
from a list proposed by the Supreme Court of Justice. It also elects 
members of a complex set of national labor courts. Members of 
the superior district courts are elected for six years, whereas jueces 
departido (lower-court, or sectional, judges) and instructores or jueces 
de instruccion (investigating judges) are elected to four-year terms 
but may be reelected. The nine superior district courts hear ap- 
peals in both civil and criminal matters from decisions rendered 
on the trial level by the courts in each department. 

Juzgados de partido (civil and criminal trial courts) are established 
in departmental capitals and in towns and cities throughout Bolivia. 
The criminal sections have investigating judges who investigate and 
prepare criminal cases for trial when appropriate. These cases are 
tried by sectional judges. Commercial and civil matters on per- 
sonal and property actions are heard by the civil sections of the 
trial courts. 

A number of small claims courts are scattered throughout the 
country and are limited to actions involving personal and real 
property or personal actions. Larger claims may be submitted to 
the same court, but the parties have the right of appeal to the sec- 
tional judge. 

At the bottom of the judicial system are the mayors' courts, which 
consist of local judgeships. The civil jurisdiction of these courts is 
limited to hearing small claims and, in the criminal field, chiefly 
to police and correctional matters. 

Theoretically, the judiciary is an autonomous and independent 
institution with far-reaching powers. In reality, the judicial sys- 
tem remains highly politicized; its members often represent parti- 
san viewpoints and agendas. Court membership still reflects political 
patronage. As a result, the administration of justice is held hostage 
to the whims of party politics. Because members often also represent 



177 



Bolivia: A Country Study 

departmental interests, a national legal culture has not been fully 
developed. 

Owing to years of military rule, Bolivia's legal culture has stag- 
nated. The closure of universities in the 1970s resulted in a declin- 
ing system of legal education. Only in the late 1980s did the Bolivian 
legal system have access to developments in organization and the- 
ory that had taken place in other nations. In 1989 AID initiated 
a program to overhaul the system of the administration of justice. 
In the opinion of most observers, however, the near- term prospects 
for implementing any reforms appeared poor. 

Of particular concern in the 1980s was the increasing influence 
exercised by the cocaine industry over judges and even justices of 
the Supreme Court of Justice. Because of their low salaries, mem- 
bers of the courts were susceptible to the offers of the large amounts 
of money by narcotics traffickers (see The Criminal Justice Sys- 
tem, ch. 5). 

The Electoral System 

The May 1989 elections marked the sixth time that Bolivians 
had gone to the polls since 1978. This proliferation of elections did 
not make up for the twelve-year electoral hiatus imposed on the 
country by successive military dictatorships. Following years of 
authoritarian rule, the Bolivian electorate faced elections without 
undergoing a process of institution-building and electoral practice. 
The result was a chaotic transition period that culminated in 
October 1982 with the election of Hernan Siles Zuazo (1982-85). 

In 1978 the National Electoral Court annulled the first elections 
because of large-scale fraud; as a result, the military reintervened. 
The 1979 elections produced a congressionally mandated one-year 
interim government debilitated by military coups and countercoups. 
In 1980 a bloody military coup prevented Congress from assem- 
bling to elect a new president. In 1982 the Congress elected in 1980 
was convoked to choose a president. Elections were held again in 
1985, one year earlier than originally mandated by Congress. In 
May 1989, Bolivians cast their ballots for the third democratic and 
civilian president of the 1980s. 

All Bolivian citizens at least twenty-one years of age, or eigh- 
teen if married, are guaranteed the right to vote through secret 
ballot in free and open elections. All voters must register with neigh- 
borhood electoral notaries established prior to an election. To regis- 
ter, voters must present a cedula de identidad (national identity card), 
a birth certificate, or a military service card. Because voting is con- 
sidered a civic duty, failure to register or vote invokes several penal- 
ties. Only citizens over seventy may abstain voluntarily. Mental 



178 



Government and Politics 



patients, traitors, convicts, and conscripted soldiers are ineligible 
to vote. 

The electoral system comprises the National Electoral Court, elec- 
toral judges, electoral notaries, departmental electoral courts, and 
electoral juries. The most important of these bodies, the National 
Electoral Court, is an independent, autonomous, and impartial or- 
ganization charged with conducting the electoral process. The court 
may recognize or deny registration to political parties, fronts, or 
coalitions. Sixty days before elections, it approves a single multi- 
color ballot with symbols of parties or pictures of candidates run- 
ning for office. The court also counts the ballots in public and 
investigates all charges of fraud. Once the electoral results have 
been certified by the National Electoral Court, it must provide 
credentials accrediting elected deputies and senators, as well as the 
president and vice president. The court must also present an an- 
nual report of its activities to Congress. 

The National Electoral Court consists of six members elected 
by Congress, the Supreme Court of Justice, the president of the 
republic, and the political parties with the highest number of votes 
in the previous election. Members serve four years and are eligi- 
ble for reelection. 

Electoral judges are seated in the capitals of each department 
or province. They hear appeals by notaries regarding admission 
or exclusion of inscriptions in the registry, try electoral notaries 
and other persons for crimes committed during the electoral process, 
hear charges of fraud and other voting irregularities, and annul 
false electoral cards. 

Electoral notaries must be present at every electoral station in 
the country. Their principal task is to organize and provide cus- 
tody for the electoral registry. They are also empowered to register 
citizens to vote and to keep an accurate registry of voters. 

The 1986 electoral law establishes ten departmental electoral 
courts, including one in each department capital and two in La 
Paz. Each court comprises six members, three of whom are named 
by Congress and three by the superior district courts, president 
of the republic, and political parties. The departmental electoral 
courts have the power to name all judges and notaries and to re- 
move them if charges of corruption or inefficiency brought against 
them by parties are confirmed. They also are empowered to count 
ballots in public for the president, vice president, senators, and 
deputies. Each electoral jury is composed of five citizens who moni- 
tor voting at the polling place. They are chosen randomly from 
the lot of voters at each voting table; service is compulsory. 



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Bolivia: A Country Study 

The Constitution establishes that only political parties that are 
duly registered with the National Electoral Court may present can- 
didates for office. Although labor unions, entrepreneurial associa- 
tions, and regional civic committees have a very large voice in policy 
making, by law they must work through political parties. The Con- 
stitution and the electoral law provide for a proportional represen- 
tation system to ensure the representation of minority parties. 

The proliferation of tiny parties, alliances, and electoral fronts 
in the late 1970s led to the enactment of Article 206 of the 1980 
electoral law. This article states that parties, alliances, or coalitions 
that do not achieve 50,000 votes must repay to the national trea- 
sury the costs of printing the ballot. Repayment must be made three 
days after the final ballot has been counted; a jail term awaits party 
chiefs who fail to pay. 

In 1986 amendments to the 1980 electoral law sought to estab- 
lish further limits on the proliferation of parties by establishing 
restrictions for party registration. The specific objective of these 
reforms was to limit the access of minuscule parties to Congress 
in order to establish a viable two- to three-party system. 

The most significant amendment to the electoral law governed 
registration requirements. Beginning in 1986, citizens had to present 
either a national identity card or a military service card to register 
to vote. Critics noted that this reform would legally exclude 60 per- 
cent of the peasantry that lacked either document. Indeed, fraud 
generally occurred in the countryside where the population lacked 
these documents. The law was amended in December 1988, 
however, to allow birth certificates as valid documents for regis- 
tration. Universal suffrage was one of the principal gains of the 
1952 Revolution; thus, attempts to restrict voting eligibility have 
been closely scrutinized. 

Since elections returned to Bolivia in 1978, only two have been 
relatively honest. In 1978 the elections were annulled following mas- 
sive fraud on the part of the military- sponsored candidate. The 1979 
elections were much cleaner, but charges of fraud still surfaced. Most 
observers agreed that the 1980 elections were clean, but because of 
a military coup, the outcome was postponed until 1982. Owing to 
electoral reforms, the 1985 general elections were by far the fairest 
ever held in Bolivia. Nonetheless, because elections are inherendy 
political, accusations of fraud are a permanent feature of the elec- 
toral system. Early in the campaign for the 1989 elections, charges 
of fraud were already being leveled against the ruling MNR. 

Departmental and Local Government 

In 1989 Bolivia was divided into nine departments, which were 
subdivided into ninety-four provinces. Provinces, in turn, were 



180 



Government and Politics 



divided into sections and sections into cantons. Following the French 
system of governance, each department is governed by a prefect, 
who is appointed by the president for a four-year term. Prefects 
hold overall authority in military, fiscal, and administrative mat- 
ters, working in each substantive area under the supervision of the 
appropriate minister. Centralized control is ensured by the presi- 
dent's appointment of subprefects, officials vested with the adminis- 
tration of the provinces. Cantons are administered by corregidores 
(administrative officials named after the Spanish colonial officials), 
who are appointed by the prefect of their department. Serving under 
the corregidores are agentes (agents) who have quasi-judicial and quasi- 
executive functions. 

The president's power of appointment created a system of pa- 
tronage that reached down into the smallest administrative unit. 
Especially under military governments, the office of the prefect was 
key to obtaining regional loyalty. Under democratic rule, local 
government reflected the pattern of job struggle present in the na- 
tional bureaucracy. 

In some areas, ayllus (see Glossary) prevailed as the principal 
local government. Years of military rule did not disrupt these com- 
munal structures. Each community selected jilacatas or malleus to 
head the ayllus, a practice that reflected the prevalence of a politi- 
cal system outside the structures of the Bolivian state. As a result, 
the Bolivian campesino was marginal to the political process. 

The principal local structure was the municipal government sys- 
tem. Historically, municipal governments in Bolivia proved sus- 
ceptible to political instability; democratic procedures at the local 
level were suspended from the time of the Chaco War to 1985, and 
municipal elections were not held after 1948. During the military 
period, mayors of cities were appointed by the president, a prac- 
tice that prevented the development of local and autonomous 
governmental structures. Instead, municipal governments through- 
out Bolivia became part of the patronage distributed among re- 
tainers by de facto rulers. 

For the first time since 1948, municipal elections were held in 
1985. They were also held in December 1987 and were scheduled 
again for December 1989. In large measure, the reemergence of 
municipal elections has been very healthy for the development and 
consolidation of democracy in Bolivia. However, many of the same 
problems that plagued democracy at the national level have emerged 
in municipal elections. 

Municipal governments are bound by the terms of the Constitu- 
tion and the Organic Law of Municipalities, a 125-article law ap- 
proved in January 1985. Theoretically, the municipal governments 



181 



Bolivia: A Country Study 

are autonomous. Autonomy refers primarily to the direct and free 
election of municipal authorities, the power to extract and invest 
resources, and the power to implement plans and projects. 

Four types of municipal government exist in Bolivia. In the cap- 
itals of the departments, municipal governments function under 
the direction of an alcalde (mayor), who should be subject to a 
municipal council, which consists of twelve members. The capi- 
tals of the provinces also function under the direction of a mayor, 
as well as a six-member municipal junta, or board. Provincial sec- 
tions are governed by a four-member municipal junta and a mayor. 
In the cantons, municipal governments function under the direc- 
tion of municipal agents. 

Municipal governments have executive, judicial, comptroller, 
and legislative functions that reside mainly in the municipal coun- 
cil. Theoretically, the council governs at the local level, and the 
mayor is subordinate to its mandates. Mayors are elected by the 
council and are accountable to its members, who may impeach 
them. But the mayor is a local executive who commands a great 
deal of influence and can direct the activities of the council. 

Mayors and council members are elected in each department 
and province for two-year terms. To become a council member 
or mayor, a person must be a citizen in possession of all rights, 
be twenty-one years of age (or eighteen if married), have run on 
a party slate, and be a resident of the district that the candidate 
seeks to represent. Members of the clergy, state employees, and 
active-duty military service personnel may not run for office. 

Because councils are elected on the basis of proportional represen- 
tation, minority parties have a significant degree of influence. Spe- 
cifically, if a candidate for mayor does not receive a majority of 
the vote, the councils must elect the next mayor from the top three 
contenders. The experience of the December 1987 elections in the 
La Paz mayoral race revealed that standoffs in the councils could 
cause a mayoral election to be held hostage to the whims of in- 
dividual council members. Several proposals for reforming the elec- 
toral laws affecting municipal government have been debated in 
Congress; however, it appeared unlikely in early 1989 that they 
would be approved in the near future. 

Political Dynamics 

The Legacy of the 1952 Revolution 

In 1989 Bolivia celebrated seven consecutive years of civilian rule. 
Considering the nation's history of political instability and turmoil, 
the longevity of the current democratic period marked a significant 



182 



Perez Velasquez Street, La Paz 
Courtesy Inter-American Foundation (Kevin Healy) 

achievement. Clearly, democracy did not come easily to Bolivia; 
only when other alternatives were exhausted did the country's po- 
litical leaders accept representative government. 

Between 1978 and 1982, seven military and two weak civilian 
governments ruled the country. Coups and countercoups charac- 
terized one of the darkest and most unstable periods in Bolivian 
history. The unsolved dilemmas of the MNR-led revolution, wors- 
ened by decades of corrupt military dictatorships, accounted for 
Bolivia's convoluted transition to democracy. 

The 1952 Revolution sparked the transformation of Bolivia and 
initiated a process of state-led development that envisioned a har- 
monious pattern of capitalism and populist redistribution. State 
capitalism, however, proved to be more compatible with exclusion- 
ary, military-based rule than with the populist politics of the MNR. 
In fact, the inability of the MNR to control the demands for greater 
redistribution by organized labor, led by the COB, culminated in 
the MNR's overthrow in 1964. 

Conflict between labor and the state deepened under military 
rule. With the exception of the Juan Jose Torres Gonzalez period 
(1970-71), military governments repressed organized labor to im- 
plement state capitalist development. As a result, over the next two 
decades class conflict was exacerbated. State capitalism (see Glos- 
sary) had been incapable of improving the living standards of the 



183 



Bolivia: A Country Study 

majority of Bolivians, and the economy was still heavily depen- 
dent on a single export commodity. Under the government of 
General Hugo Banzer Suarez (1971-78), the health of the econ- 
omy rested on excessive foreign borrowing. 

A second objective of the revolution had been to institutionalize 
a political model that could both incorporate the masses mobilized 
by the MNR and provide access to state jobs for the middle class. 
Although it attempted to emulate Mexico's Institutional Revolu- 
tionary Party (Partido Revolucionario Institucional — PRI), the 
MNR failed to subordinate labor, military, and peasant groups 
to the party structure. Instead, the party was held hostage to the 
interests of factional leaders who eventually conspired with the mili- 
tary to overthrow Paz Estenssoro and the MNR. The military made 
several attempts to institutionalize a new political order, includ- 
ing a Soviet-like Popular Assembly (Asamblea Popular) in June 
1970 and a corporatist legislature in 1974. Like the MNR, however, 
the military also failed to create an alternative model of politics. 

In short, the failure of the revolution and the subsequent mili- 
tary regimes to accomplish political and economic objectives led 
to the deepening of cleavages that sparked the revolution in the 
first place. By the late 1970s, Bolivia was a country torn apart by 
regional, ethnic, class, economic, and political divisions. This was 
the context in which the transition to democracy was to take place. 

The Tortuous Transition to Democracy 

The succession of elections and coups that followed the military's 
withdrawal from politics in 1978 revealed the deterioration of Boliv- 
ian institutional life (see table 15, Appendix). In the absence of 
military leadership for the process of transition, parties, factions, 
and other groups searched for a formula to carry them to the 
presidency. Nearly seventy political parties registered for the general 
elections in 1978, including at least thirty MNR factions. 

In this context, it became evident that elections would not solve 
the structural problems facing Bolivia. In 1979, 1980, and 1985, 
the winning party could only muster a plurality of votes during 
the elections. As a result, the legislature became the focal point 
of political activity as parties and tiny factions maneuvered to in- 
fluence the final outcome of the general elections. For example, 
in 1980 Congress elected as president Hernan Siles Zuazo, who 
had won a plurality of votes. Simultaneously, factions of the mili- 
tary linked to narcotics and other illicit activities were unwilling 
to surrender control of the state to civilian politicians who threat- 
ened to investigate charges of human rights violations and corrup- 
tion during the Banzer years. 



184 



Government and Politics 



The July 17, 1980, coup by General Luis Garcia Meza Tejada 
represented a two-year interruption of the transition to democracy. 
Garcia Meza's military regime was one of the most corrupt in Boliv- 
ian history; Garcia Meza and his collaborators maintained close 
links with cocaine traffickers and neofascist terrorists. Faced with 
international isolation and repudiation from nearly every political 
and social group, Garcia Meza and the generals that succeeded 
him ruled with brute force. By 1982 disputes among rival officers 
and pressure from abroad, political parties, the private sector, and 
labor eventually led to the convocation of Congress that had been 
elected in 1980. 

Siles Zuazo of the Democratic and Popular Unity (Unidad Derao- 
cratica y Popular — UDP) coalition, was again elected president by 
Congress on October 10, 1982. The UDP was an amorphous en- 
tity that grouped Siles Zuazo 's own Nationalist Revolutionary 
Movement of the Left (Movimiento Nacionalista Revolucionario 
de Izquierda — MNRI), the Bolivian Communist Party (Partido 
Comunista Boliviano — PCB), and the relatively young Movement 
of the Revolutionary Left (Movimiento de la Izquierda Revolu- 
cionaria — MIR). Having been denied the presidency in three con- 
secutive elections, Siles Zuazo 's rise to power was an auspicious 
occasion. He enjoyed overwhelming popular support and appeared 
to have a mandate to implement populist reforms. The military 
and its civilian allies were completely discredited and were no longer 
a threat or an alternative to rule Bolivia. 

By 1982, however, Bolivia faced the most severe economic and 
political crisis of the preceding three decades. The economy was 
beset by chronic balance of payments and fiscal deficits. The most 
immediate manifestation of the crisis was an inability to service 
payments on its foreign debt of nearly US$3 billion (see Growth 
and Structure of the Economy, ch. 3). By 1982 the gross domestic 
product (GDP — see Glossary) had dropped by nearly 10 percent. 
Siles Zuazo thus faced the dilemma of trying to democratize the 
country in the context of economic scarcity and crisis. The UDP 
promised to enact a more equitable development program that 
would address labor's demands for higher wages and other benefits. 
As the crisis deepened, however, labor became increasingly dis- 
affected. 

The economic plight exacerbated tensions between populist and 
antipopulist wings of the MNR and other political parties that had 
been latent since the revolution. Because the UDP controlled only 
the executive, political conflict was heightened. Congress remained 
firmly in control of a de facto alliance between Paz Estenssoro's 
MNR (the faction that retained the party's name) and Banzer's 



185 



Bolivia: A Country Study 

Nationalist Democratic Action (Accion Democratica Nacionalista — 
ADN). 

Conflict between branches of government had been manifest since 
the beginning of the transition process. Legislators formed com- 
plex coalitional blocs to choose executives, whom they promptly 
turned on and sought to subvert. Congressionally sanctioned coups, 
labeled "constitutional coups," were only one example of the pre- 
vailing political instability. 

Under Siles Zuazo, the full complexity of the crisis emerged. 
From the outset, the government was weakened by a serious con- 
frontation between the legislature and the executive over alterna- 
tive solutions to the economic predicament. Responsibility for 
resolving the crisis rested with the executive, whereas Congress exer- 
cised its oversight powers. Additionally, the presence of minuscule 
parties in Congress exacerbated the confrontation between the UDP 
and the parties in the legislature. 

As a result of the government's inability to deal with Congress, 
Siles Zuazo relied on executive decrees. Congress, in turn, charged 
the president with unconstitutional behavior and threatened to im- 
peach or overthrow him in a constitutional coup. During the three 
years of his presidency, Siles Zuazo was unable to put down the 
congressional threat, directed by opposition parties but bolstered 
by groups from his own UDP. 

Between 1982 and 1985, the Siles Zuazo government attempted 
to address Bolivia's economic crisis by negotiating several tenta- 
tive paquetes economicos (stabilization programs) with the Interna- 
tional Monetary Fund (IMF — see Glossary). Each was the center 
of a recurring political battle that put Siles Zuazo in the middle 
of a class struggle between the powerful COB, which represented 
labor, peasants, and sectors of the middle class, and the relatively 
small but organized private sector led by the Confederation of Pri- 
vate Entrepreneurs of Bolivia (Confederation de Empresarios Priva- 
dos de Bolivia — CEPB). This conflict reflected a recurring debate 
in Bolivia between models of development and the question of what 
class should bear its costs. It also revealed the extent of Bolivia's 
reliance on foreign aid. 

Between 1982 and 1985, the CEPB and COB attempted to pres- 
sure the government to enact policies favorable to their interests. 
Siles Zuazo would decree a stabilization program designed to satisfy 
the IMF and the United States internationally and the CEPB 
domestically. The COB would respond with strikes and demon- 
strations, often backed by peasants and regional civic associations. 
Lacking congressional support, the government would modify the 
program to the point of annulling its effectiveness through wage 



186 



Government and Politics 

increases and subsidies, thereby provoking the wrath of the CEPB 
and IMF. 

By 1984 the government was completely immobilized and in- 
capable of defining effective economic policies. The result was the 
transformation of a severe economic crisis into a catastrophe of 
historic proportions. During the first half of 1985, inflation reached 
an annual rate of over 24,000 percent. In addition, Bolivia's debt- 
servicing payments reached 70 percent of export earnings. In De- 
cember 1984, lacking any authority to govern because of the conflict 
with Congress, labor, the private sector, and regional groups, the 
Siles Zuazo government reached the point of collapse. As the cri- 
sis intensified, the opposition forced Siles Zuazo to give up power 
through a new round of elections held in July 1985. 

The 1985 elections reflected the complex nature of the Bolivian 
political process. Banzer, who had stepped down in disgrace in 1978, 
won a slight plurality with 28.5 percent; the old titan of the MNR, 
Paz Estenssoro, finished a close second with 26.4 percent. A fac- 
tion of the MIR, headed by Vice President Jaime Paz Zamora, 
took third. An indication of the left's fall from the grace of the elec- 
torate was the MNRI's showing of only 5 percent. 

In Congress the MNR moved quickly to form a coalition that 
would enable Paz Estenssoro to gain the presidency. After luring 
the MIR with promises of state patronage, a coalition was formed, 
and Paz Estenssoro was elected president of Bolivia for the fourth 
time since 1952. Although enraged by the outcome of the congres- 
sional vote, Banzer and the ADN made the calculated decision to 
accept it. In so doing, the former dictator protected his long-term 
political interests. 

Democracy and Economic Stabilization 

In 1985 the entire nation was submerged in a state of tense antic- 
ipation as Paz Estenssoro unveiled his strategy to confront the 
economic and political crisis. Throughout August 1985, a team of 
economists worked to design the new government's economic in- 
itiatives. The private sector came to play a crucial role in the elabo- 
ration and implementation of the government's economic policy. 
The private sector's main organization, the CEPB, had shifted its 
traditional support for authoritarian military solutions and by 1985 
had become clearly identified with free-market models that called 
for reducing the state's role in the economy. When the economic 
reforms were announced, the impact on the private sector became 
evident. 

On August 29, 1985, Paz Estenssoro signed Decree 21060, one 
of the most austere economic stabilization packages ever imple- 
mented in Latin America. Hailed as the NPE, the decree sought 



187 



Bolivia: A Country Study 

to address the structural weaknesses in the state capitalist develop- 
ment model that had been in place since 1952. Specifically, the 
decree aimed at ending Bolivia's record- setting hyperinflation and 
dismantling the large and inefficient state enterprises that had been 
created by the revolution. Hence, the NPE represented a shift from 
the longstanding primacy of the state in promoting development 
to a leading role by the private sector. The NPE also rejected the 
notion of compatibility between populist redistribution and capitalist 
development that had characterized previous MNR-led regimes. 

After addressing the economic side, Paz Estenssoro moved to 
resolve the political dimensions of the crisis. In fact, shortly after 
the announcement of Decree 21060, the COB, as it had done so 
often under Siles Zuazo, headed a movement to resist the NPE. 
But the COB had been weakened by its struggles with Siles Zuazo. 
After allowing the COB to attempt a general strike, the govern- 
ment declared a state of siege and quickly suffocated the protest. 
Juan Lechin Oquendo and 174 other leaders were dispatched to 
a temporary exile in the Bolivian jungle. They were allowed to 
return within weeks. By then, the government had already deliv- 
ered the COB a punishing blow that all but neutralized organized 
labor. 

Even as he moved to contain the COB, Paz Estenssoro sought 
to overcome the potential impasse between the executive and legis- 
lature that had plagued Siles Zuazo for three years. The MNR did 
not have a majority in Congress, and therefore Paz Estenssoro had 
to contemplate a probable confrontation with the legislature; for 
this reason, among others, he decreed the NPE. In moving to over- 
come this political gap, Paz Estenssoro did not seek support from 
the center-left groups that elected him. Indeed, any move in that 
direction would have precluded the launching of the NPE in the 
first place. Paz Estenssoro had in fact seized on parts of the pro- 
gram pushed by Banzer and the ADN during the electoral cam- 
paign. As a result, Banzer was left with the choice of backing Paz 
Estenssoro or opposing a stronger version of his own policy pro- 
gram. 

Discussions opened by Paz Estenssoro with Banzer ripened into 
a formal political agreement, the Pact for Democracy (Pacto por 
la Democracia — pacto), signed on October 16, 1985. The formula- 
tion of the pacto was a crucial political development. Under its terms, 
Banzer and the ADN agreed to support the NPE, a new tax law, 
the budget, and repression of labor. In return, the ADN received 
control of a number of municipal governments and state corpora- 
tions from which patronage could be used to consolidate its or- 
ganizational base. The MNR also agreed to support reforms to 



188 



Government and Politics 



the electoral law aimed at eliminating the leftist groups that voted 
against Banzer in Congress. Most important, the pacto allowed ADN 
to position itself strategically for the 1989 elections. 

In the most immediate sense, the pacto was effective because it 
guaranteed the Paz Estenssoro government a political base for im- 
plementing the NPE. For the first time in years, the executive was 
able to control both houses of Congress. Paz Estenssoro used this 
control to sanction the state of siege and defeat all attempts of the 
left to censure the NPE. In broader historical terms, the pacto was 
significant because it created a mechanism to overcome the struc- 
tural impasse between the executive and the legislature. 

The pacto served other purposes as well; for example, it gave Paz 
Estenssoro leverage over some of the more populist factions of the 
MNR who were unhappy with the NPE because they saw it as a 
political liability in future elections. For three years, Paz Estens- 
soro used the pacto to prevent any possible defections. Hence, party 
factions that could have harassed the president contemplated the 
immediate costs of being cut off from patronage even as they were 
forestalled in their larger political goal of altering the NPE. 

As in Colombia and Venezuela, where pacts between the prin- 
cipal parties were responsible for the institutionalization of democ- 
racy, the. pacto was deemed an important step toward consolidating 
a two-party system of governance. In contrast to the Colombian 
and Venezuelan cases, however, the pacto was based more on the 
actions of Banzer and Paz Estenssoro than on the will of their respec- 
tive parties. Moreover, because the pacto was a reflection of 
patronage-based politics, its stability during electoral contests was 
tenuous at best. During the municipal elections in 1987, for ex- 
ample, party members, when confronted with patronage offers from 
opposition parties, faced enormous difficulties in adhering to it. 

The campaign for the 1989 elections tested the pacto to the break- 
ing point. At issue was the need to ensure that in the event neither 
candidate secured a majority, the losing party would support the 
victor in Congress. Polls conducted in December 1988 and Janu- 
ary 1989 suggested that Banzer could emerge victorious. Under 
the terms of an addendum to the pacto signed in May 1988, the 
MNR would be obligated to support Banzer in Congress. This sit- 
uation provoked a sense of despair in the MNR, which perceived 
itself as an extension of the ADN with no real likelihood of emerg- 
ing victorious in May 1989. 

In a surprising pre-electoral move, Banzer announced the for- 
mation of a "national unity and convergence alliance" between 
the ADN and MIR. Congress deliberated fourteen hours on Au- 
gust 5 before electing Jaime Paz Zamora as president of Bolivia 



189 



Bolivia: A Country Study 

and Luis Ossio Sanjines of the ADN-Christian Democratic Party 
(Partido Democrata Cristiano — PDC) alliance as vice president. 
On handing the presidential sash to his nephew, Paz Zamora, on 
August 6, Paz Estenssoro thereupon became the first president to 
complete a full term in office since his second presidency in 1960-64. 
The political maturity of the election was illustrated not only by 
Banzer's support for the MIR and the MIR's willingness to join 
with the ADN but also by the vows of both Banzer and Paz Zamora 
to continue with the policies of the NPE. 

The ' 'national unity and convergence alliance," however, re- 
vealed that old ways of doing politics had survived. Although the 
ADN and MIR each received nine ministries, the ADN controlled 
the principal policy-making bureaucracies, such as foreign affairs, 
defense, information, finance, mining and metallurgy, and agricul- 
ture and peasant affairs. The ADN's share of the cabinet posts went 
to many of the same individuals who had ruled with Banzer in the 
1970s. The MIR's principal portfolios were energy and planning. 
Following a traditional spoils system based on patronage, the new 
ruling partners divided among themselves regional development 
corporations, prefectures, and decentralized government agencies, 
as well as foreign embassy and consular posts. 

The 1989 Elections 

In the initial months of 1989, the MNR tried in vain to post- 
pone the election date, arguing that the deadline for electoral regis- 
tration restricted citizen participation. In December 1988, the 
party's delegation in Congress had managed to amend the elec- 
toral law of 1986. Arguing that the new registration requirements, 
which limited registration to citizens who possessed cedulas de iden- 
tidad (national identity cards), constituted a violation of universal 
suffrage, the MNR pushed through legislation that added birth cer- 
tificates and military service cards as valid registration documents. 
The ADN refused to go along with its ally and eventually charged 
the MNR with conducting fraudulent registrations. By mid- 
February this issue had triggered the rupture of the pacto. 

The end of the pacto revealed an old reality about Bolivian poli- 
tics. To achieve power, broad electoral alliances must be estab- 
lished; yet, electoral alliances have never translated into stable or 
effective ruling coalitions. On the contrary, electoral alliances have 
exacerbated the tensions built into a complex system. Thus, once 
in power, whoever controls the executive must search for mecha- 
nisms or coalitions such as the pacto to be able to govern. This search 
was the single most important challenge facing Bolivian politicians 
in the 1980s. 



190 



President Jaime Paz Zamora 
Courtesy Embassy of Bolivia, 
Washington 




As expected, every political party was forced to scramble for new 
allies. The ADN joined forces with the now minuscule Christian 
Democrats by naming Ossio Sanjines as Banzer's running mate 
in an effort to attract other political elements. Banzer led every 
major poll, and the ADN repeatedly called for Congress to respect 
the first majority to emerge from the May 7 election. 

The situation was more complex in the MNR where, after a bitter 
internal struggle, Gonzalo Sanchez de Lozada, a pragmatic former 
minister of planning and coordination and prominent entrepreneur, 
captured the party's nomination. The MNR's strategy was to de- 
velop Sanchez de Lozada' s image as a veteran movimientista (move- 
ment leader) to capture populist support. At the same time, party 
strategists intended to attract support from outside the party by 
building on the candidate's entrepreneurial background. The task 
of converting the candidate into an old party member apparently 
succeeded: old-line populist politicians dominated the first slots on 
the party's legislative lists. The naming of former President Walter 
Guevara Arze as the vice presidential candidate was perceived as 
further evidence of the party's success in influencing the candidate. 

Following a similar electoral logic, the MIR sought to broaden 
its base of support by establishing ties with several parties, includ- 
ing Carlos Serrate Reich's 9th of April Revolutionary Vanguard 
(V anguardia Revolucionaria 9 de Abril — VR-9 de Abril), the Revo- 
lutionary Front of the Left (Frente Revolucionario de Izquierda), 



191 



Bolivia: A Country Study 

and a number of dissidents from the MNRI. Paz Zamora, the 
MIR's candidate, led in some polls, and most analysts agreed that 
he would pose a significant threat to the MNR and ADN. 

The left attempted a comeback following the disastrous experience 
of the UDP years. Headed by Antonio Aranibar's Free Bolivia 
Movement (Movimiento Bolivia Libre — MBL), the left grouped 
into a broad front labeled the United Left (Izquierda Unida — IU). 
The IU brought together splinter factions of the MIR, the Socialist 
Party One (Partido Socialista Uno— PS-1), and the PCB, and it 
counted on the support of organized labor, especially the COB. 
Given the historical divisions within the Bolivian left, however, the 
IU was not perceived to be a serious contender. If it could main- 
tain unity beyond the 1989 elections, observers believed that its 
impact might be greater than anticipated. 

The main newcomer to national electoral politics, although no 
stranger to La Paz politics, was Carlos Palenque. Popularly known 
as el compadre (the comrade), Palenque was a former folksinger 
turned radio and televison owner and talk show host. His "popu- 
lar" style of broadcasting had always enjoyed widespread appeal 
in the working-class and marginal neighborhoods surrounding La 
Paz. For at least a decade, Palenque had been regarded as a possi- 
ble candidate for mayor of La Paz; during the 1987 municipal elec- 
tions, his name was under consideration by the MNR. 

Palenque 's move into national politics was prompted by the clos- 
ing down of his television station for airing accusations made by 
an infamous drug trafficker, Roberto Suarez Gomez, against the 
Bolivian government (see Narcotics Trafficking, ch. 5). To pro- 
mote his candidacy, Palenque founded Conscience of the Father- 
land (Conciencia de la Patria — Condepa), which grouped together 
a bizarre strain of disaffected leftists, populists, and nationalists 
who had defected from several other parties. 

Ten parties and fronts contested the election, which was held 
as scheduled on May 7, 1989. The results, a virtual three-way tie 
among the MNR, ADN, and MIR, were not surprising (see table 
16, Appendix). As expected, Congress once again was given the 
task of electing the next president from the top three contenders. 
But the slight majority (a mere 5,815 votes) obtained by the MNR's 
candidate, Sanchez de Lozada, was surprising to observers, as was 
the unexpected victory by Palenque in La Paz Department. His 
showing was significant in a number of ways. First, it demonstrated 
that none of the major political parties had been able to attract lower 
middle-class and proletarian urban groups, who had flocked to el 
compadre; Palenque had wisely targeted marginal and displaced sec- 
tors of La Paz. Second, Condepa' s showing reflected the growth 



192 




Presidential campaign graffiti in an Altiplano town 
Courtesy Inter-American Foundation (Kevin Healy) 
Political graffiti in 14 de Septiembre, the Chapare 
Courtesy Inter-American Foundation (Kevin Healy) 



193 



Bolivia: A Country Study 

of racial and ethnic tension in Bolivian electoral politics. For the 
first time in the history of the Bolivian Congress, for example, a 
woman dressed in native garb would serve as a deputy for La Paz 
Department. 

Claims of fraud from every contender, especially in the recount- 
ing of the votes, clouded the legitimacy of the process. At one stage, 
fearing an agreement between the ADN and MIR, the MNR called 
for the annulment of the elections. Indeed, negotiations were well 
advanced between the MIR and ADN to upstage the relative vic- 
tory obtained by the MNR. Between May and early August, the 
top three finishers bargained and manipulated in an attempt to se- 
cure control of the executive branch. 

The composition of Congress exacerbated the tensions between 
the parties in contention. Because seventy-nine seats are needed 
to elect a president, compromise was indispensable. In mid- 1989, 
however, it was unclear whether the political system in Bolivia had 
matured enough to allow for compromise. 

Political Forces and Interest Groups 

Political Parties 

Bolivian political parties do not perform the classic functions of 
aggregating and articulating the interests of social classes, regions, 
or individuals. Historically, political parties have been divorced 
from pressure groups such as labor, the private sector, and regional 
civic committees. Instead, parties have been vehicles through which 
politicians can lay a claim to state patronage. As in other Latin 
American nations, the dependent nature of the middle class, which 
does not own hard sources of wealth and therefore relies on the 
state for employment, accounts partially for this role. 

Since the 1950s, the MNR has been the major party in Bolivia. 
Because the MNR was the party of the 1952 Revolution, every 
major contemporary party in Bolivia is rooted in one way or another 
in the original MNR. The rhetoric of revolutionary nationalism 
introduced by the MNR has dominated all political discourse since 
the 1950s. Owing to the fact that the MNR was a coalition of po- 
litical forces with different agendas and aspirations, however, the 
subsequent splits in the party determined the course of Bolivian 
politics. 

The major splits in the MNR occurred among Guevara Arze, 
Paz Estenssoro, Siles Zuazo, and Lechm, the principal founders 
of the party. Each led a faction of the party that sought to control 
the direction and outcome of the revolution. As MNR leaders tried 



194 



Government and Politics 



to subvert each other, factional strife culminated in the overthrow 
of the MNR and the exile of the four titans of the revolution. 

Although years of military rule did not erode the MNR's ap- 
peal, factional disputes within the party resulted in a proliferation 
of parties that surfaced in the late 1970s when the military opted 
for elections. Indeed, political party lines were very fluid; party 
boundaries were not the product of ideological distinctions and 
shifted at any moment. 

In the late 1970s, Paz Estenssoro, Lechm, Siles Zuazo, and 
Guevara -Arze reemerged as the principal political actors. Siles 
Zuazo's MNRI joined forces with the PCB and the MIR to finally 
gain control of the presidency in 1982. Paz Estenssoro orchestrated 
a congressional vote that catapulted him to power in 1985. Until 
1986 Lechm remained at the helm of the COB. Guevara Arze served 
as interim president in 1979 and was the MNR's vice presidential 
candidate in 1989. 

Founded in 1979 by Banzer, the ADN was the most important 
political party to have emerged in the 1980s. The ADN was sig- 
nificant in that it grouped the supporters of Banzer into a relatively 
modern party structure. Simultaneously, however, the ADN was 
a classic caudillo-based party, with Banzer sitting at the top as the 
undisputed leader. 

The ADN's ideology of democratic nationalism was not signifi- 
cantiy contrary to the revolutionary nationalism of the MNR; in 
fact, several of the principal ADN leaders were dissidents of the 
MNR. In large part, however, democratic nationalism was rooted 
in a nostalgia for the stability experienced under Banzer' s dictator- 
ship in the 1970s. 

Since the 1979 elections, the ADN's share of the electorate has 
grown considerably. Especially in the urban areas, the party has 
attracted the upper sectors of the middle class. Its call for order, 
peace, and progress following the turmoil of the Siles Zuazo years 
resulted in its outpolling other parties in the 1985 election. Banzer 
claimed to have the backing of 500,000 Bolivians, a figure that 
would make the ADN the largest party in Bolivia. 

The other significant political party to emerge after 1970 was 
the MIR. Founded in 1971 by a group of young Christian Demo- 
crats educated at Lou vain University in Belgium, the MIR was 
linked to the student movement that swept across the world in the 
latter part of the 1960s. Initially, the MIR expressed solidarity with 
urban guerrilla groups such as the National Liberation Army 
(Ejercito de Liberacion Nacional — ELN) and had close ties to its 
namesake, Chile's more radical Movement of the Revolutionary 
Left (Movimiento de la Izquierda Revolucionaria — MIR). 



195 



Bolivia: A Country Study 

The Bolivian MIR achieved political maturity during Siles 
Zuazo's government. As a part of the cabinet, it was responsible 
in large measure for enacting important economic decrees. Paz 
Zamora, the MIR's chief, served as the UDP's vice president. Like 
other Bolivian political groups, however, the MIR went from a 
party of idealistic youth to an organization that was captured by 
a cadre of job-hungry politicians. 

By 1985 the MIR had split into at least three broad factions that 
represented the ideological tensions within the original party. Paz 
Zamora' s faction was the most successful, mainly because it re- 
tained the party's name while avoiding responsibility for the UDP 
period. By the late 1980s, Paz Zamora' s MIR had become the third 
largest political party in Bolivia; indeed, some observers believed 
that after the May 1989 elections it would eclipse the MNR. The 
new MIR portrayed itself as a Social Democratic party that could 
work within the parameters of the NPE implemented in 1985. 

The MBL, which reflected one of the more orthodox Marxist 
strains within Bolivia's original MIR, remained an important MIR 
faction in the late 1980s. For the 1989 elections, the MBL managed 
to put together the IU. The IU included the remnants of a deeply 
divided Bolivian left, including the PCB, which was still feeling 
the effects of its role in the infamous UDP coalition. 

The Military 

In 1952 the MNR downgraded the military as an institution and 
attempted to create new armed forces imbued with revolutionary 
zeal. This event initiated a long and complex relationship between 
the armed forces and politicians. The 1964 coup by General 
Barrientos began a cycle of military intervention that culminated 
only in 1982, with the withdrawal of the military from the political 
arena (see Military Rule, 1964-82, ch. 1; Evolution of the Mili- 
tary Role in Society and Government, ch. 5). 

By then the military as an institution had been reduced to a col- 
lection of factions vying for control over the institution and the 
government. A process of disintegration within the armed forces 
reached its extreme form under General Garcia Meza, who took 
power in 1980 after overthrowing Lidia Gueiler Tejada (1979-80), 
a civilian constitutional president (see The Tumultuous Transi- 
tion to Democracy, 1978-82, ch. 1). By that juncture, however, 
the military was plagued by deep internal cleavages along ideo- 
logical, generational, and rank lines. The connection of Garcia 
Meza and his followers to the burgeoning cocaine industry further 
divided the armed forces. 



196 



Government and Politics 



Officers such as Banzer and Garcia Meza represented the last 
vestiges of the prerevolutionary armed forces that sought unsuc- 
cessfully to eradicate populism in Bolivia. In the process, however, 
they discredited the military and, at least in the short run, elimi- 
nated the institution as a power option in Bolivian politics. The 
older generation retired in disgrace, accused of narcotics traffick- 
ing, corruption, and violations of human rights. 

Since 1982 the military has undergone a major reconstruction 
process. The old guard of "coupist" officers was replaced as the 
generation of officers who had graduated from the new military 
academy in the 1950s reached the upper echelons of the armed 
forces. The younger generation appeared committed to the rebuild- 
ing of the military and manifested its support for civilian rule. It 
also accepted end-of-year promotions authorized by the Senate. 

After 1982 key officers rejected overtures from a few adventure- 
some civilians and soldiers who were dismayed by the "chaos and 
disorder" of democratic rule. The military command was even in- 
volved in aborting a coup attempt in June 1984 that included Siles 
Zuazo's brief kidnapping. Officers realized that a coup against Siles 
Zuazo or any other civilian would disturb the military's efforts to 
rebuild . 

The military's unwillingness to launch another coup was even 
more significant given the economic and political situation in Bolivia 
between 1982 and 1985. The COB and business, regional, and 
peasant groups exerted untenable demands on the Siles Zuazo 
government. All of these groups tried to coerce the regime by using 
tactics such as strikes, roadblocks, and work stoppages. 

The military remained in its barracks despite the social turmoil 
that enveloped the country. Indeed, the only military action dur- 
ing this period occurred in response to a presidential directive. In 
March 1985, Siles Zuazo called upon the military to restore order 
after miners occupied La Paz. Once this had been accomplished, 
the armed forces retreated obediently. Their mission then became 
one of ensuring the peaceful transfer of power to the victor of the 
1985 elections. The military's role in support of democracy in the 
late 1980s was in large measure dependent on the success of Paz 
Estenssoro's reforms under the NPE. In early 1989, Bolivia's armed 
forces had no reason or excuse to intervene. 

Because of the military's willingness to engage in joint exercises 
with United States troops and in drug interdiction programs in the 
late 1980s, the military once again became the recipient of aid that 
had been drastically reduced since 1980. The joint antinarcotics 
operation with the United States, dubbed "Operation Blast Fur- 
nace," also provided the military with important equipment and 



197 



Bolivia: A Country Study 

training. In fact, a close partnership developed between Bolivia's 
armed forces and the United States Southern Command (see For- 
eign Military Assistance in the 1980s; Narcotics Trafficking, ch. 5). 

A new generation of officers were to assume command of the 
armed forces in the 1990s. Most were young cadets during the 1970s 
and were given special treatment and protection by General Banzer. 
Some observers had suggested that these officers might have in- 
tervened if Banzer had been denied the presidency in 1989 by a 
congressional coalition. 

Organized Labor 

Historically, organized labor in Bolivia had been one of the most 
politically active and powerful in Latin America. Owing to the im- 
portance of mining in the economy, the Trade Union Federation 
of Bolivian Mineworkers (Federacion Sindical de Trabaj adores 
Mineros de Bolivia — FSTMB) has been the backbone of organized 
labor since the mid- 1940s. Before the 1952 Revolution, the FSTMB 
orchestrated opposition to the three dominant tin barons and led 
protests against worker massacres. 

During the first few days of the revolution, the MNR founded 
the COB in order to group the FSTMB and the other labor unions 
under an umbrella organization that would be subordinate to the 
party. In creating the COB, the MNR was following the example 
of Mexico's PRI, which effectvely controlled labor through the 
party's structures. In Bolivia the COB and especially the FSTMB, 
which controlled labor in the nationalized mining sector, pushed 
for worker comanagement and cogovernment. Moreover, worker 
militias were allowed to form freely when the military as an insti- 
tution was downgraded. 

As a result, the COB became an autonomous institution that 
challenged the primacy of the MNR. Relations between the MNR 
and the COB were more state to state than party to subordinate 
labor union. In fact, the COB came to perceive the state as an ap- 
paratus that had been appropriated by the MNR politicians and 
that had to be captured in order to further the interests of the work- 
ing class. This relationship was to characterize the relations be- 
tween the COB and the Bolivian state until the mid-1980s. 

As the COB grew in power, the MNR relied on the reconstructed 
military to control labor and its militias. With the adoption of a 
state capitalist model of development that postponed the aspira- 
tions of organized labor, the conflict between the state and labor 
deepened. This conflict climaxed in the mid-1960s under the mili- 
tary government that overthrew the MNR. With the exception of 



198 



Government and Politics 



the 1969-71 period, the military initiated a long period of repression 
that sent the COB into clandestine existence. 

When the military called for elections in 1978, the COB, despite 
being oudawed between 1971 and 1978, reemerged as the only insti- 
tution able to represent the interests of the working class. Moreover, 
the COB directed the workers to demand economic, political, and 
social rights that had been denied to them throughout the military 
period. 

Labor's strength climaxed during Siles Zuazo's second term 
(1982-85). However, the economic crisis had reached such extremes 
that in surrendering to the demands of the workers the UDP govern- 
ment only exacerbated the economic situation. Although this period 
demonstrated the power of the COB to coerce governments, it also 
led to the downfall of organized labor. As the COB staged hundreds 
of strikes and stoppages, the economy faltered and public opinion 
turned against labor. 

The MNR government headed by Paz Estenssoro thus was able 
to impose the NPE on the workers. The COB attempted to stage 
a strike, but three years of confrontation with the Siles Zuazo 
government had seriously weakened its ability to mobilize labor. 
With the support of the pacto, Paz Estenssoro imposed a state of 
siege that effectively debilitated organized labor. Indeed, the COB's 
power was undermined so effectively that in the late 1980s it was 
incapable of staging a general strike. 

After 1985 labor's efforts centered on preventing the decentrali- 
zation and restructuring of Comibol. The restructuring of the na- 
tionalized mining sector, especially the mass layoffs, had decimated 
the FSTMB. As a result, the COB demanded the rehabilitation 
of Comibol and respect for the rights of labor unions. In Septem- 
ber 1986, the FSTMB sponsored a workers' march, dubbed 
"March for Life," to fend off plans to restructure Comibol, to halt 
mass firings, and to raise miners' salaries. In response, the govern- 
ment declared a congressionally sanctioned state of siege and im- 
mediately imposed Decree 21337, which called for the restructuring 
of Comibol along the lines originally prescribed in Decree 21060. 

The "March for Life" forced government and labor to enter 
into negotiations, mediated by the Bolivian Bishops Conference 
(Conferencia Episcopal Boliviana — CEB), that postponed the im- 
plementation of Decree 21337. The result was an accord whereby 
the government agreed that all production and service units tar- 
geted for elimination by the decree would remain intact. Moreover, 
the government agreed that all management decisions in Comibol 
would be made only after consulting with labor unions. Finally, 



199 



Bolivia: A Country Study 

the MNR government promised to end massive layoffs and agreed 
that employment would be capped at 17,000 in Comibol. 

Because the accord was opposed by radical labor leaders grouped 
under the so-called Convergence Axis, the agreement fell through, 
and Decree 21337 was imposed. Labor had suffered its worst defeat. 
In July 1987, radical labor leaders were ousted at the COB's con- 
vention. COB strategies in 1988 proved more effective. In May 
1988, for example, it helped defeat proposals to decentralize health 
care and education. For the moment, labor had been reduced to 
defensive actions that sought to protect its few remaining benefits. 
Nonetheless, the COB was still a formidable force that would have 
to be faced in the future. For democracy to survive in Bolivia, it 
was clear that the demands and aspirations of labor would have 
to be taken into account. 

The Peasantry 

The peasantry became politically active only after the 1952 Revo- 
lution. Previously, much of the Indian peasant population had been 
subjected to a form of indentured service called pongaje and had 
been denied voting rights through a series of legal restrictions. 
Pongaje ended with the Agrarian Reform Law enacted in 1953. 
Universal suffrage, in turn, incorporated the Indian masses into 
Bolivian political life. 

The MNR established a new type of servitude, however, by using 
the Indian peasant masses as pawns to further the political interests 
of the party. Party bosses paraded peasants around at election ral- 
lies and manipulated peasant leaders to achieve particularistic gain. 
Some authors have labeled this system of political servitude pongaje 
politico, a term that evokes images of the prerevolutionary exploi- 
tation of the peasantry. 

As the MNR surrendered control of the countryside to the mili- 
tary, the peasantry came to rely extensively on military protection. 
This reliance enabled the military to forge the so-called Peasant- 
Military Pact, through which they promised to defend the newly 
acquired lands of the peasantry in return for help in defeating any 
new attempts to dismantle the military as an institution. 

With the overthrow of the MNR in 1964, General Barrientos 
buttressed his grip on power by manipulating the Peasant-Military 
Pact. The pact became a mechanism through which the military 
co-opted and controlled the peasantry. Autonomous peasant or- 
ganizations, as a result, failed to emerge. 

During Banzer's presidency, the military attempted to continue 
the manipulation of the peasantry. In January 1974, peasant 
demonstrations against price increases culminated in a bloody 



200 



A meeting of Aymara Indians in the Altiplano region 
Movie theater mural in Llaqui, 
a mining town in Potosi Department 
Courtesy Inter-American Foundation (Kevin Healy) 



201 



Bolivia: A Country Study 

incident known as the "Massacre of Tolata," in which more than 
100 peasants were either killed or wounded. The Tolata incident 
put an end to the Peasant- Military Pact; paradoxically, it led to 
the emergence of a number of autonomous peasant and Indian or- 
ganizations that remained active in politics in the late 1980s. 

The most significant was the Katarista movement, or Katarismo, 
which embraced political parties and a campesino union. The po- 
litical parties, such as the Tupac Katari Indian Movement (Movi- 
miento Indio Tupac Katari — MITKA), were based on an ideology 
rooted in the Indian rebellion that Julian Apasa (Tupac C atari, 
also spelled Katari) led against the Spaniards in 1781 (see State, 
Church, and Society, ch. 1). After 1978 the MITKA succeeded 
in electing several deputies to Congress. 

The union-oriented branch of Katarismo founded the Tupac 
Katari Revolutionary Movement (Movimiento Revolucionario 
Tupac Katari— MRTK). In 1979 the MRTK established the first 
peasant union linked to the COB, known as the General Trade 
Union Confederation of Peasant Workers of Bolivia (Confedera- 
cion Sindical Unica de Trabajadores Campesinos de Bolivia — 
CSUTCB). The establishment of this union was a significant de- 
velopment. For the first time, an autonomous peasant organiza- 
tion recognized a commonality of interests with labor. Many 
observers noted, however, that the campesino movement had never 
really been accepted by the COB. Moreover, the fortunes of the 
MRTK were tied to those of its ally, the UDP. 

In the 1980s, Bolivian peasant organizations fared poorly. MITKA 
and MRTK parties performed worse than anticipated in elections 
and were forced to seek alliances with larger parties. Electoral re- 
forms in 1980 and 1986 further undermined the capacity of peasant 
political parties to compete in national elections. The greatest chal- 
lenge confronting these movements was the need to break the mo- 
nopoly over the peasantry held in the countryside by the traditional 
political parties. 

Regional Civic Committees 

In the late 1980s, Bolivia was one of the least integrated nations 
of Latin America. Because Bolivia's geographic diversity generated 
deep regional cleavages, Bolivian governments had been challenged 
to incorporate vast sectors of the country into the nation's politi- 
cal and economic systems. The most profound of these regional 
splits separated the eastern lowlands region known as the Oriente 
(Santa Cruz, Beni, and Pando departments and part of Cocha- 
bamba Department) from the Altiplano. Natives of the Oriente, 
called Cambas, often looked with disdain at highlanders, referred 



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Government and Politics 



to as Kollas. Over the years, Cambas contended that the central 
government, located in La Paz, had financed the development of 
the Altiplano by extracting resources from Santa Cruz Department. 
This became a self-fulfilling prophecy in the mid-1980s because 
of the primacy of natural gas and the collapse of the mining indus- 
try. For most of Bolivia's history, however, the Altiplano had sup- 
ported the development of the Oriente. 

In this context of regional disputes, comites civicos (civic commit- 
tees) emerged to articulate and aggregate the interests of cities and 
departments. The most significant was the pro-Santa Cruz Civic 
Committee, founded in the early 1950s by prominent members of 
that department's elite. In the late 1950s, this committee effectively 
challenged the authority of the MNR in Santa Cruz. Some ob- 
servers argued that between 1957 and 1959 the Civic Committee 
in effect ruled Santa Cruz Department. As was the case with other 
sectors of society, the MNR was unable to subordinate regional 
interests to the interests of the party. 

During the period of military rule, leaders of the civic commit- 
tees received prominent government posts. During the Banzer 
period, for example, members of the Santa Cruz committee were 
named mayor and prefect. The military was among the first to dis- 
cover that civic committees were better mechanisms for regional 
control than political parties. 

Civic committees also proved to be more effective representa- 
tives of departmental interests. Under democratic rule, the civic 
committee movement bypassed parties as valid intermediaries for 
regional interests. This situation was attributable to the political 
parties' failure to develop significant ties to regions. Regional dis- 
putes often took precedence over ideology and party programs. 
Nevertheless, although civic committees often presented the de- 
mands of their respective regions directly to the executive branch, 
the Constitution of 1967 states that only political parties can 
represent the interests of civil society. Civic committees thus forged 
contacts within political parties, and political parties, in turn, ac- 
tively sought out members of civic committees to run on their slates. 
These efforts by political parties to incorporate the demands of the 
civic committees as their own could be perceived as healthy for the 
institutionalization of an effective party system in Bolivia. More- 
over, civic committees helped to relieve partially the regional ten- 
sions that, under authoritarian regimes, were mediated only by 
the military. 

The Private Sector 

Although historically Bolivia had a very small private sector, it 
wielded considerable political influence. Before the 1952 Revolution, 



203 



Bolivia: A Country Study 

three large enterprises accounted for the bulk of the nation's min- 
ing production and were the only other major source of employ- 
ment besides the state. With the advent of the revolution and the 
nationalization of the mines, the private sector suffered a severe 
setback. The ideology of the revolutionaries was to establish a model 
of development in which the state would take the lead role. But 
the MNR's intention was also to create a nationally conscious bour- 
geoisie that would reinvest in Bolivia and play a positive role in 
the country's development. 

As the revolution changed course in the 1950s, the private sec- 
tor recovered under the tutelage of the state. Joint ventures with 
private, foreign, and domestic capital were initiated during the late 
1950s, and Bolivia moved firmly in a state capitalist direction in 
the 1960s. This pattern of development had a negative effect on 
the private sector. Private entrepreneurs became dependent on the 
state for contracts and projects. This dependence eliminated en- 
trepreneurial risk for some individuals in the private sector while 
simultaneously increasing the risks for others who lacked govern- 
mental access. As a result, the private sector divided into two broad 
camps: those who depended on the state and prospered and those 
who relied on their entrepreneurial skills and fared poorly. 

In 1961 the CEPB was founded as a pressure group to represent 
the interests of the private sector before the state. Fearing the im- 
pact of populist and reformist governments, the private sector sought 
protection from the military; in fact, individual members of the 
CEPB often funded coups. Beginning with the Barrientos govern- 
ment, the CEPB exerted pressure on military regimes and extracted 
significant concessions from the state. The private sector came to 
play a protagonist role during the dictatorship of Banzer; many 
members of the CEPB staffed key ministries and were responsible 
for designing policies. 

During this period, however, the CEPB did not speak for the 
private sector as a whole. In fact, many private entrepreneurs be- 
came disenchanted with the economic model and opposed the Ban- 
zer regime. State capitalism actually hindered the development of 
a modern and efficient private sector because a few individuals 
benefited at the expense of the majority. Moreover, private entre- 
preneurs realized that the state was a competitor that had an un- 
fair advantage in the marketplace. 

By the end of the tumultuous transition period in 1982, CEPB 
members generally believed that a liberalized economy and a dem- 
ocratic system would serve its class interests better than any author- 
itarian dictatorship. The CEPB became one of the principal groups 
that forced the military out of politics in 1982. It then pressured 



204 



Government and Politics 



the weak UDP government to liberalize the economy and to 
eliminate state controls over market forces, opposing attempts to 
regulate the activity of the private sector. Ironically, although gener- 
ally hostile to the private sector, several UDP policies, such as the 
"dedollarization" decree, were highly favorable to that sector (see 
Growth and Structure of the Economy, ch. 3). 

During the UDP period, the CEPB emerged as a class-based 
organization that articulated the interests of the private sector and 
countered those of COB-led labor. In a very real sense, a well- 
structured class conflict developed as two class-based organizations 
battled each other within the framework of liberal representative 
democracy. 

The introduction of the NPE in 1985 represented the culmina- 
tion of years of efforts by the private sector to liberalize the econ- 
omy. Prominent members in the private sector, such as Gonzalo 
Sanchez de Lozada, Fernando Romero, Fernando Illanes, and Juan 
Cariaga, played a key role in the elaboration of the NPE. They 
expected the NPE to end the devastating economic crisis of the 
mid-1980s and to create a safe environment for private investment 
and savings. As stabilization measures brought a spiraling infla- 
tion rate to a halt, the NPE was lauded as the "Bolivian miracle. ' ' 

Yet, the NPE did not please the entire private sector, mainly 
because stabilization had not produced economic reactivation. Some 
entrepreneurs, long accustomed to the protective arm of the state, 
realized that the free market was a difficult place to survive and 
sought to alter the model. Others also suggested that the state should 
reestablish controls to protect local industry from what they consid- 
ered to be unfair competition from neighboring countries. 

Still, privatization of state enterprises and other measures helped 
raise the level of private sector confidence in the NPE. Because 
private enterprise was by definition the motor of the new economic 
model, a positive and supportive outlook developed in the CEPB. 
Whether or not this attitude would continue rested on the ability 
of the government to reactivate the economy. 

The Media 

Bolivian governments historically recognized the political sig- 
nificance of the media and attempted to censor communication 
channels employed by the opposition. In the 1940s, the MNR uti- 
lized the daily La Calle to mobilize support for its cause. During 
the revolution, the MNR purged unfavorable news media and es- 
tablished La Nation as the official news organization. Military 
governments, in particular, subjected journalists to harassment, 
jail terms, and exile. The Banzer government, for example, expelled 



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Bolivia: A Country Study 

many journalists from the country. In the early part of the 1980s, 
General Garcia Meza closed down several radio stations and or- 
dered the creation of a state-run network binding all private sta- 
tions. Many Bolivian and foreign journalists were imprisoned and 
their reports censored. 

After 1982 freedom of the press developed as an important 
byproduct of the democratization of Bolivian politics. Siles Zuazo's 
government was perhaps the first to honor its pledge to respect free- 
dom of expression. Radio and newspapers were guaranteed free- 
doms that Bolivians had never enjoyed previously. 

In the early years of democratic rule, the monopoly enjoyed by 
Channel 7, the state-run television station, represented the greatest 
obstacle to freedom of the press. Until 1984 Channel 7 was part 
of the patronage distributed to partisan supporters. Although the 
Siles Zuazo administration respected freedom of the press in other 
media, it used the station to further its political agenda and barred 
the establishment of privately owned stations. The Ministry of In- 
formation argued that television was a strategic industry that had 
to be kept under state control. After several rounds with the oppo- 
sition in Congress, the minister of information refused to issue per- 
mits for the opening of private television stations. 

Despite government restrictions, the media experienced a tremen- 
dous boom in the mid-1980s. The growth and proliferation of party 
politics generated a concomitant expansion in the communications 
industry. Newspapers, television, and radio stations mushroomed 
during the 1984-85 electoral season. Some forty-seven public and 
private television stations were in operation by 1989. One of the 
great surprises was the presence of six channels in the city of 
Trinidad, Beni Department, which had a population of fewer than 
50,000. In short, democracy had magnified the importance of the 
media in Bolivian politics. 

In 1989 daily newspapers reflected the general pattern of ties 
between party politics and the media. Five daily newspapers en- 
joyed national circulation: Presencia, Ultima Hora, Hoy, El Diario (La 
Paz), and El Mundo (Santa Cruz). Of these, Presencia was the only 
publication that did not reflect partisan interests. Founded in 1962 
under Roman Catholic auspices, Presencia was the largest and most 
widely read newspaper, with a circulation of 90,000. In large mea- 
sure, Presencia reflected the opinions of socially conscious Roman 
Catholic clergy, who often used its pages to advocate reform. 

The oldest newspaper in Bolivia was El Diario, with a circula- 
tion of 45,000. Founded in 1904, this daily belonged to the Carrasco 
family, one of the most prominent in La Paz. Historically, El Diario 
reflected the very conservative philosophy of the founding family. 



206 



Government and Politics 



In 1971 , during the populist fervor of the Torres period, its offices 
were taken over by workers and converted into a cooperative. The 
Banzer government returned the newspaper to the Carrasco family. 
Hence, El Diario was generally perceived as partisan to the views 
of Banzer and his ADN party. The death of Jorge Carrasco, the 
paper's director, however, apparently changed the philosophy of 
the daily. Jorge Escobari Cusicanqui, the new director, was linked 
to Condepa. 

El Mundo, with a circulation of 20,000, emerged as one of the 
most influential daily newspapers in Bolivia. It was owned by 
Osvaldo Monasterios, a prominent Santa Cruz businessman. This 
newspaper was commonly identified as the voice of the ADN. A 
similar observation could be made about Ultima Hora, formerly an 
afternoon paper that had been circulating in the mornings since 
1986. Mario Mercado Vaca Guzman, one of Bolivia's wealthiest 
entrepreneurs and a well-known ADN militant, owned Ultima Hora. 
This newspaper had hired outstanding academics to write its edi- 
torials. 

Perhaps the most politicized of all newspapers in Bolivia was Hoy, 
owned by Carlos Serrate Reich, an eccentric politician who also 
owned Radio Mendez. Serrate demonstrated how the media could 
be utilized to achieve electoral advantage. Through Hoy, which had 
a circulation of 25,000, and Radio Mendez, Serrate made huge 
inroads into the rural areas of La Paz Department for the VR-9 
de Abril, his political party. The only other newspaper of sig- 
nificance in Bolivia was Los Tiempos, a Cochabamba daily with a 
circulation of 18,000. In the 1970s, Los Tiempos had been the lead- 
ing newspaper in the interior, but it was bypassed by El Mundo 
in the 1980s. 

Like the printed media, private television stations reflected the 
positions of the major political parties in Bolivia. By the same token, 
the political line of the owners was often reflected in the news broad- 
casts of each channel. This situation was particularly true in La 
Paz, where the city's eight channels, including Channel 7 and Chan- 
nel 13 (the university station), were tied directly to political parties. 

Foreign Relations 

Bolivia's foreign relations have been determined by its geograph- 
ical location and its position in the world economy. Located in the 
heart of South America, the country has lost border confronta- 
tions with neighboring nations. Along with Paraguay, Bolivia is a 
landlocked nation that must rely on the goodwill of neighboring 
countries for access to ports. Bolivia's highly dependent economy 
has exacerbated the nation's already weak negotiating position in 



207 



Bolivia: A Country Study 

the international arena. Economic dependency has established the 
parameters within which Bolivia could operate in the world. 

Bolivia's history is replete with examples of a recurring tragi- 
comedy in the course of international affairs. Modern Bolivia is 
about one-half of the size that it claimed at independence. Three 
wars accounted for the greatest losses. Of these, the War of the 
Pacific (1879-83), in which Bolivia lost the Littoral Department 
to Chile, was clearly the most significant; it still accounted for a 
large part of Bolivia's foreign policy agenda in the late 1980s. Ter- 
ritorial losses to Brazil during the War of Acre (1900-1903) were 
less well known but accounted for the loss of a sizable area. The 
bloody Chaco War with Paraguay (1932-35) culminated in the loss 
of 90 percent of the Chaco region (see fig. 3). 

Relations with the United States fluctuated considerably from 
the 1950s to the 1980s. United States economic aid to Bolivia dur- 
ing the 1950s and 1960s, the highest rate in Latin America, was 
responsible for altering the course of the 1952 Revolution. Subse- 
quent United States support for military regimes of the right, 
however, left a legacy of distrust among sectors of the Bolivian popu- 
lation. The lowest point in bilateral relations was reached during 
the military populist governments of General Ovando (1965-66 
and 1969-70) and General Torres (1970-71). Student protesters 
burned the binational center in 1971 , and the military government 
expelled the Peace Corps. In the late 1970s, then-President Jimmy 
Carter's human rights program began Bolivia's transition to 
democracy by suspending United States military assistance to 
Bolivia. Washington's nonrecognition of Bolivia's military right- 
wing governments in the early 1980s because of their ties to the 
narcotics industry established a new pattern in United States- 
Bolivian relations. 

The democratic era that began in 1983 also ushered in a more 
cordial phase in Bolivian regional relations. Bolivia's relations with 
Brazil and Argentina improved significantly, owing in part to a 
common bond that appeared to exist between these weak democratic 
governments emerging from military rule and facing the challenges 
of economic chaos. In early 1989, relations with Brazil were at their 
highest level in decades, as evidenced by new trade agreements. 
Relations with Argentina were rather strained, however, because 
of Argentina's inability to pay for Bolivian natural gas purchases. 
Bolivian-Chilean relations remained contentious because Bolivia's 
principal foreign policy goal revolved around its demand for an 
access to the Pacific Ocean. 

In the 1980s, Bolivia became more active in world affairs. Ad- 
hering to a nonaligned policy, it established relations with the Soviet 



208 



Government and Politics 



Union, Cuba, East European countries, and the Palestine Libera- 
tion Organization (PLO). In some cases, such as with Hungary, 
relations matured into trade agreements. Bolivia also maintained 
an important presence in the Organization of American States 
(OAS) and the United Nations (UN). 

The United States 

In the 1980s, the growth of Bolivia's narcotics industry domi- 
nated United States-Bolivian relations. Drug enforcement programs 
in Bolivia were begun in the mid-1970s and gathered strength in 
the early part of the 1980s. Concern over military officers' grow- 
ing ties to cocaine trafficking led to a tense relationship that cul- 
minated in June 1980 in the military's expulsion of the ambassador 
of the United States, Marvin Weisman, as a persona non grata. 
The ' ' cocaine coup" of July 1980 led to a total breakdown of rela- 
tions; the Carter administration refused to recognize General Garcia 
Meza's government because of its clear ties to the drug trade. Presi- 
dent Ronald Reagan continued the nonrecognition policy of his 
predecessor. Between July 1980 and November 1981, United States- 
Bolivian relations were suspended. 

In November 1981, Edwin Corr was named as the new ambas- 
sador, thus certifying Bolivian progress in narcotics control. Am- 
bassador Corr played a key role in forcing the military to step down. 
In the subsequent democratic period, Corr helped shape the drug 
enforcement efforts of the weak UDP government. In 1983 Presi- 
dent Siles Zuazo signed an agreement through which Bolivia 
promised to eradicate 4,000 hectares of coca over a three-year period 
in return for a US$14.2 million aid package. Siles Zuazo also 
promised to push through legislation to combat the booming drug 
industry. 

With United States funding and training, an elite antinarcotics 
force known as the Rural Area Police Patrol Unit (Unidad Movil 
Policial para Areas Rurales — Umopar) was created (see The Se- 
curity Forces, ch. 5). Siles Zuazo 's government, however, was 
incapable of carrying out an effective antinarcotics program. Op- 
position from social groups, the significance of traditional coca use 
in Bolivia, and the absence of a major drug law were the most com- 
monly cited explanations for this failure. Between 1982 and 1985, 
the total number of hectares under cultivation doubled, and the 
flow of cocaine out of Bolivia increased accordingly. In May 1985, 
in a final effort to save face with Washington, the Siles Zuazo 
government approved a decree calling for extensive drug enforce- 
ment programs; the United States perceived this effort as too little 
and too late, however. 



209 



Bolivia: A Country Study 

Under Paz Estenssoro's government (1985-89), which made sin- 
cere efforts to combat the drug trade, relations with the United 
States improved significantly. As a result, aid to support economic 
reforms increased dramatically. In 1989 Bolivia received the greatest 
amount of United States aid in South America and the third highest 
total in Latin America, behind El Salvador and Honduras. The 
major obstacle to harmonious relations, however, remained the 
prevalence of drug trafficking. 

During the Paz Estenssoro government, United States policy 
toward Bolivia was split between congressional efforts to enforce 
the 1985 Foreign Assistance Act, limiting aid to countries that en- 
gaged in drug trafficking, and the Reagan administration's stated 
objective of helping consolidate and strengthen democratic insti- 
tutions in Latin America. Both aspects of United States policy were 
responsible for setting the course of relations with Bolivia. 

In August 1985, Corr was replaced by Edward Rowell, who 
worked closely with the new Paz Estenssoro government to com- 
bat Bolivia's economic crisis and the flourishing drug trade. Rowell 
arrived in La Paz shortly after a visit of members of the Select Com- 
mittee on Narcotics Abuse and Control of the United States House 
of Representatives. The committee's report revealed a deep dis- 
trust for Paz Estenssoro's stated intention to carry on with the drug 
battle and to implement fully the provisions of the May 1985 decree. 
In June 1986, owing to pressures from the United States Congress, 
Washington announced the suspension of US$7.1 million in aid 
because Bolivia had not satisfied the coca eradication requirements 
of the 1983 agreement. 

Simultaneously, however, the Bolivian government secretly en- 
tered into Operation Blast Furnace, a joint Bolivian-United States 
effort aimed at destroying cocaine laboratories in Beni Department 
and arresting drug traffickers (see Narcotics Trafficking, ch. 5). 
Despite the outcry from political party leaders on the left, who ar- 
gued that the operation required Bolivian congressional approval 
because it involved foreign troop movements through the nation's 
territory, Operation Blast Furnace began in July 1986 with the 
presence of over 150 United States troops. Paz Estenssoro's govern- 
ment survived the tide of opposition because of the support forth- 
coming from the ADN-MNR pacto. 

Despite Bolivia's evident willingness to fight the drug war, the 
United States Congress remained reluctant to certify the country's 
compliance with the Foreign Assistance Act. In October 1986, the 
Bolivian envoy to Washington, Fernando Illanes, appeared before 
the United States Senate to report on the progress made under 
Operation Blast Furnace and on the intention of the Bolivian 



210 



Government and Politics 



government to approve an effective drug law to both eradicate the 
coca leaf and control the proliferation of cocaine production. Revela- 
tions of continued involvement in the drug trade by Bolivian govern- 
ment officials, however, undermined the efforts of Paz Estenssoro's 
administration to satisfy the demands of the United States Congress. 

Congressional efforts in the United States to sanction Bolivia con- 
tributed to the degree of frustration felt by the Paz Estenssoro 
government. Ambassador Rowell, however, was able to convince 
the Reagan administration that the Bolivian government was a 
trustworthy partner in the drug war. In spite of another reduction 
in United States aid in late 1987, the Reagan administration cer- 
tified that Bolivia had met the requirements of Section 481(h) of 
the Foreign Assistance Act. Still, the United States Congress was 
dissatisfied and, in early 1988, decertified Bolivia's progress. 

Bolivia's efforts met with some encouragement from the Rea- 
gan administration. The United States supported Bolivia's negoti- 
ations with international banks for debt reduction and provided 
substantial aid increases in terms of both drug assistance and de- 
velopment programs. United States aid to Bolivia, which totaled 
US$65 million in 1987, reached US$90 million in 1988. Although 
the Reagan administration requested almost US$100 million for 
fiscal year 1989, disbursement was contingent on the congressional 
certification of Bolivian progress on eradication programs. Despite 
this increase in assistance, it paled in comparison with total co- 
caine production revenues, conservatively estimated at US$600 mil- 
lion. Bolivian opponents to the drug enforcement focus therefore 
argued that although the United States advocated drug enforce- 
ment and interdiction programs, it was unwilling to fund them. 

United States satisfaction with Bolivian efforts in terms of stabiliz- 
ing the economy, consolidating democracy, and fighting the drug 
war, however, was evidenced in 1987-88 with the announcement 
of several AID programs. Specifically, assistance was targeted to 
rural development projects in the Chapare region of Cochabamba 
Department, the center of the cocaine industry. Other AID pro- 
grams in health, education, and privatization of state enterprises 
were also initiated. More ambitious projects aimed at strengthen- 
ing democratic institutions, such as legislative assistance and ad- 
ministration of justice, were scheduled for initiation in 1989. AID 
also proposed the creation of an independent center for democracy. 
Future AID disbursements, however, were contingent on Bolivia's 
meeting of the terms of the Foreign Assistance Act and agreements 
signed with the United States government for the eradication of 
5,000 to 8,000 hectares of coca plantations between January and 
December 1989. 



211 



Bolivia: A Country Study 

In 1988 Bolivia moved closer toward satisfying United States 
demands for more stringent drug laws. In July the Bolivian Con- 
gress passed, and Paz Estenssoro signed, a controversial bill known 
as the Law of Regulations for Coca and Controlled Substances (see 
Threats to Internal Security, ch. 5). 

The bombing incident during Secretary of State George P. 
Shultz's visit to Bolivia in early August 1988, attributed to narco- 
terrorists, raised concern that a wave of Colombian- style terrorism 
would follow (see Narcotics Trafficking, ch. 5). Shultz's visit was 
intended to praise Bolivia's effort in the drug trade; however, in 
certain Bolivian political circles it was perceived as a direct mes- 
sage about pressing ahead with coca eradication efforts. 

Nevertheless, with the approval of the 1988 antinarcotics law and 
a new mood in Washington about Bolivia, Ambassador Robert S. 
Gelbard's arrival in La Paz in early October 1988 was an auspi- 
cious event. The ambassador headed efforts to confer "special case" 
status for Bolivia in order to allow for a more rapid disbursement 
of aid. In return, Bolivian government officials pointed out that 
United States-Bolivian relations were at their highest level ever. 

Gelbard's honeymoon, however, was short lived. On October 26, 
Umopar troops killed one person and injured several others in the 
town of Guayaramerm in the Beni. As was the case with another 
violent incident in Villa Tunari in June 1988, the left and the COB 
perceived Umopar' s actions as the byproduct of a zealous and mis- 
guided antidrug policy. The presence of United States Drug 
Enforcement Administration (DEA) agents in Guayaramerm also 
renewed questions about the role of United States drug enforce- 
ment agents. As 1988 ended, controversy also surrounded the an- 
nouncement that, under United States Army civic-action programs, 
United States technicians would help remodel and expand the 
airports in the cities of Potosi and Sucre (see Foreign Military 
Assistance in the 1980s, ch. 5). 

United States support for the Bolivian government was expected 
to continue. In large measure, however, United States policy de- 
pended on the perception in the United States Congress of Bolivia's 
progress in controlling the drug trade. Operation Blast Furnace, 
the 1988 antinarcotics law, and the arrest of several drug lords 
demonstrated that Bolivia had become a loyal and useful partner 
in the United States war on drugs. Washington expected Bolivian 
cooperation to continue after the May 1989 elections. 

The Soviet Union 

During the military populist governments of General Ovando 
and General Torres in the late 1960s, Bolivia initiated relations 



212 



Government and Politics 



with the Soviet Union and East European countries. The first for- 
mal exchange of ambassadors with the Soviet Union took place 
in 1969 and continued into the late 1980s. Political relations with 
the Soviet Union were strained somewhat during the first years 
of the Banzer regime, but they improved quickly when the Krem- 
lin promised aid for the construction of huge metallurgical plants, 
such as La Palca and Karachipampa. A paradoxical situation thus 
developed as the Soviet Union established extremely good relations 
with the right-wing military government. 

With the advent of democracy in the early 1980s, relations with 
the Soviet Union continued to improve. The UDP government es- 
tablished greater commercial ties, and political relations reached their 
highest level since 1969. But the situation deteriorated somewhat 
following the discovery of anomalies in the construction of the huge 
metallurgical complexes of the 1970s. La Palca and Karachipampa 
became useless white elephants, but the Bolivian government still 
owed for the cost of their construction. In 1985 Bolivia requested 
that the plants be made functional and that the Soviet Union take 
responsibility for their poor construction. One of the major points 
in contention was the use of obsolete technology that rendered the 
plants too expensive to operate. The Soviet Union refused to take 
responsibility for any defects in the construction of the plants. Simul- 
taneously, the Soviet Union was quite stringent in applying con- 
ditions for the repayment of Bolivia's debt. Bolivia requested that 
its debt with the Soviet Union be renegotiated along the lines of 
Paris Club (see Glossary) agreements, but Moscow refused. 

Cool relations with the Soviet Union were also attributed to 
Bolivia's continued refusal to grant landing rights to Aeroflot, the 
Soviet Union's national airline. Landing rights had been negotiated 
during the Siles Zuazo presidency. In 1985 the new Bolivian govern- 
ment had promised Moscow that Aeroflot would be allowed to land 
on Bolivian territory. In return, the Soviet Union agreed to grant 
200 scholarships and 200 round-trip tickets for Bolivian students 
and US$200 million in aid. Nonetheless, the conservative daily El 
Diario led a campaign to deny landing rights to Aeroflot, and other 
airlines, including United States-based Eastern Airlines, joined in 
this effort. A report from the military's National Security Council 
claiming that Soviet spies and arms, rather than travel agents, would 
be sent to La Paz served to shelve a decision on this issue. 

The Third World 

Following the onset of democracy, Bolivia pursued a nonaligned 
foreign policy. In 1989 Bolivia held relations with every communist 



213 



Bolivia: A Country Study 

nation, including Albania. Relations with China were established 
in 1985, and diplomatic relations with Taiwan suspended. In 1983 
Bolivia had established relations with Cuba. Relations with Cuba 
improved steadily in the mid- to late 1980s. Cuba donated medi- 
cal equipment to hospitals and supported Bolivia's quest for non- 
aligned status. Bolivian leaders, including the foreign minister, met 
with Fidel Castro Ruz and praised the achievements of the Cuban 
Revolution. 

Bolivia's foreign policy strategy in the early part of the 1980s 
was labeled ' ' independent neutrality," which was an external 
manifestation of domestic populism rooted in the 1952 Revolution. 
In fact, neutrality in foreign affairs was historically associated with 
populist regimes, such as those of the MNR (especially 1952-56) 
and Ovando and Torres (1969-71). 

The guiding principle of independent neutrality was that diplo- 
matic relations should be maintained with all nations of the world, 
regardless of political ideology. Respect for the principles of nonin- 
tervention and self-determination was a second underlying theme. 
Independent neutrality reflected a nonaligned thrust with deep roots 
in Bolivian history. The first Paz Estenssoro government (1952-56), 
for example, was the first to adopt a policy of neutrality that reflected 
the revolutionary reality of the country in the 1950s. Subsequendy, 
General Ovando 's government established relations with the Soviet 
Union, and in 1970 General Torres became the first Bolivian leader 
to attend a conference of the Nonaligned Movement. 

The Siles Zuazo regime criticized several United States efforts 
in Latin America and the Caribbean. In 1981 the Nicaraguan dele- 
gation to the UN allowed Siles Zuazo 's "government in exile" to 
denounce human rights violations in Bolivia by the Garcia Meza- 
led junta that was in power in La Paz. After assuming the presi- 
dency, Siles Zuazo criticized the Nicaraguan opposition force, the 
contras, and spoke in favor of the Contadora process, the diplomatic 
effort initiated by Mexico, Venezuela, Colombia, and Panama in 
1983 to achieve peace in Central America. In 1983 Bolivia voted 
with the majority in the UN to censure the joint United States- 
Caribbean intervention in Grenada. Siles Zuazo 's government also 
joined a region-wide movement to reform the OAS. 

Critics of the 1985-89 Paz Estenssoro administration contended 
that his more conservative domestic political agenda was reflected 
in Bolivia's foreign policy. In their view, foreign policy had be- 
come increasingly tied to the interests of the United States, affect- 
ing Bolivia's relations with other Latin American democracies. 
Critics pointed out that Bolivia had refused to participate in regional 
forums on the foreign debt issue since 1985, pursuing instead direct 



214 



Government and Politics 



negotiations with international banks. Additionally, they charged 
that Bolivia's lack of interest had excluded it from regional integra- 
tion projects such as the Andean Common Market (Ancom, also 
known as the Andean Pact). Others pointed out that Bolivia lim- 
ited its participation in regional organizations to persuading its 
Andean neighbors to eliminate the controversial Decision 24 from 
the Ancom charter that restricted foreign investment in the region. 

The loss of autonomy in foreign policy, however, was not as obvi- 
ous as critics claimed. The Bolivian government, in fact, had ac- 
tively pursued regional ties; for example, it participated in Ancom 's 
Cartagena Agreement and the Rio de la Plata Basin commercial 
and development agreement, and it sponsored a meeting of the 
Amazonian Pact. In terms of economic integration, the Bolivian 
government stressed its participation in the Latin American Eco- 
nomic System (Sistema Economico Latinoamericano — SELA) and 
the Latin American Integration Association (Asociacion Latino- 
americana de Integration — ALADI). 

A discernible change had occurred, however, with respect to 
Bolivia's policy toward the Central American conflict. In contrast 
to Siles Zuazo, Paz Estenssoro maintained a distance from the con- 
flict, limiting himself to endorsing Costa Rican president Oscar 
Arias Sanchez's initiatives. Paz Estenssoro did not challenge the 
United States on this issue, which remained outside regional peace 
efforts, such as the Contadora support group. Most significantly, 
Bolivia was conspicuously absent from the Group of Eight Latin 
American democracies that demanded hemispheric autonomy, 
sought support for Cuba's return to the OAS, and put forth an 
agenda for reforming the OAS. 

Bolivia continued to maintain good relations with the Nonaligned 
Movement in the late 1980s, although they were not as close as 
during the Siles Zuazo administration. According to Guillermo 
Bedregal Gutierrez, Paz Estenssoro' s foreign affairs and worship 
minister, relations were established with seventeen Nonaligned 
Movement nations, including Ethiopia, Mozambique, and Viet- 
nam. In addition, the Paz Estenssoro regime pointed out that 
Bolivia occupied the vice presidency of the movement's Ministerial 
Conference in 1986 and had been actively involved in the organi- 
zation of the Ministerial Conference for 1988. 

Neighboring Countries 

Bolivia's major foreign policy position in the twentieth century 
concerned its demands for a Pacific Ocean coastline on territory 
lost to Chile during the War of the Pacific (1879-83). In the early 



215 



Bolivia: A Country Study 

1980s, the Siles Zuazo administration sought the support of the 
Nonaligned Movement at its conference in Managua. Although 
Bolivia secured multilateral support for its claim, international pres- 
sure produced few results. In fact, Chile refused to deal with Bolivia 
unless multilateral organizations such as the Nonaligned Move- 
ment and the OAS were excluded from the negotiations. 

Relations with Chile changed following the election of Paz Estens- 
soro. Bedregal met on a regular basis with his Chilean counterpart 
to negotiate an outiet for Bolivia. Bedregal proposed the creation 
of a sovereign strip sixteen kilometers wide that would run north 
of the city of Arica and parallel to the Peruvian border. The tone 
of the negotiations suggested that an agreement was imminent. 

On June 10, 1987, however, Chile rejected Bedregal's proposal, 
sending shock waves through the Bolivian government. The con- 
fidence of the Paz Estenssoro government was seriously shaken by 
this foreign policy defeat, especially after so much emphasis had 
been placed on its success. Bolivians were, however, swept by 
another wave of anti-Chilean nationalism in support of the govern- 
ment. Members of Bolivia's civic organizations spontaneously im- 
posed a symbolic boycott of Chilean products. Relations with Chile 
were again suspended, and little hope for any improvement in the 
near future remained. 

Relations with Argentina and Brazil, in contrast, showed im- 
provement. A bond of solidarity developed among the three na- 
tions owing to their common dilemma of trying to democratize in 
the midst of deep economic recessions. Tensions arose, however, 
over Argentina's inability to pay for its purchases of Bolivian natural 
gas. United States intervention on Bolivia's behalf provided some 
relief to the Bolivian economy. Although by early 1989 Argentina 
still owed over US$100 million, a joint accord reached in Novem- 
ber 1988 reduced tension. Revenue from natural gas sales was cru- 
cial for the success of the new economic model adopted in 1985. 
Hence, Argentina's discontinuance of purchases of Bolivian natural 
gas in 1992 when the sales agreement was due to expire could prove 
to be catastrophic. 

Fortunately, Bolivia signed important trade agreements with 
Brazil in 1988 and 1989. Brazil agreed to purchase approximately 
3 million cubic meters of Bolivian natural gas per day beginning 
in the early to mid-1990s (see Petroleum and Natural Gas, ch. 3). 
The sales were projected to yield approximately US$373 million 
annually to the Bolivian economy. Brazil also agreed to help Bolivia 
build a thermoelectric plant and produce fertilizers and polymers. 
Finally, Bolivia and Brazil signed an agreement for the suppression 



216 



Government and Politics 



of drug traffickers, the rehabilitation of addicts, and control over 
chemicals used in the manufacturing of drugs. 

Membership in International Organizations 

Latin American integration was a major tenet of Bolivian for- 
eign policy largely because Bolivia recognized its severe geographic 
limitations. As mentioned earlier, Bolivia participated actively in 
the Amazonian Pact, Ancom, and the Rio de la Plata Basin com- 
mercial and development agreement in the late 1980s. In fact, 
Bolivia was the only country in Latin America that could boast 
membership in all three of these organizations. Bolivia was also 
a charter member of the OAS and, as noted previously, was ac- 
tive in SELA and ALADI. 

Bolivia was a founding member of the UN. In the 1980s, the 
UN served as a forum for several of Bolivia's demands, including 
its claims against Chile for access to the Pacific Ocean. In the late 
1980s, the UN also provided cooperation on debt-relief programs 
and advice on coca eradication programs. 

Like those of other nations in Latin America, Bolivia's econ- 
omy was closely scrutinized by the IMF, the World Bank, and the 
Inter- American Development Bank (IDB). Although its credit rat- 
ing had been adversely affected by nonpayment of loans to private 
banks since 1985, Bolivia managed to restore its credibility, and 
the IMF and other lending agencies reopened credit lines. 

* * * 

Until recentiy very little literature in English was available on con- 
temporary Bolivian politics. For information on Bolivia's govern- 
mental system and politics, readers may consult the following 
publications of James M. Malloy and Eduardo A. Gamarra: Revo- 
lution and Reaction; "Bolivia 1985-1987" in Abraham Lowenthal's 
Latin America and Caribbean Contemporary Record; and "The Transi- 
tion to Democracy in Bolivia" in Malloy and Mitchell A. Seligson's 
Authoritarians and Democrats. Other useful books include William H. 
Brill's Military Intervention in Bolivia; James Dunkerley's historical 
work, Rebellion in the Veins; Jonathan Kelley and Herbert S. Klein's 
Revolution and the Rebirth of Inequality; Klein's Bolivia: The Evolution 
of a Multi-Ethnic Society; Jerry R. Ladman's multidisciplinary study, 
Modern Day Bolivia; Malloy 's Bolivia: The Uncompleted Revolution; 
Christopher Mitchell's excellent The Legacy of Populism in Bolivia; and 
Rodolfo Salinas Perez's La reconquista de la democracia. 

Bolivian foreign relations are discussed in Alberto Crespo Guti- 
errez's "Prioridades de la polftica exterior Boliviana" and Jorge 



217 



Bolivia: A Country Study 

Escobari Cusicanqui's "Enunciados para una polftica international 
Boliviana," both in Relaciones Internacionales . Additional relevant 
materials include Gamarra's "Democratization and Foreign Pol- 
icy" and "The United States, Democracy, and the War on Drugs 
in Bolivia." (For further information and complete citations, see 
Bibliography.) 



218 



Chapter 5. National Security 




A winged human figure with condor symbols on the body of 
the Great Idol of Tiwanaku 



THE ARMED FORCES OF BOLIVIA, principally the army, 
traditionally have played a central role in the nation's politics, in- 
tervening frequently and ruling arbitrarily. The influence of the 
military in politics predominated for most of the nineteenth cen- 
tury, from the revolt against Spain in 1809 until the ignominious 
defeat of the armed forces by Chile in the War of the Pacific in 
1880. With a few exceptions, civilian leaders governed the coun- 
try until 1936, when the military, angered by their humiliating 
defeat by Paraguay in the Chaco War (1932-35), which they blamed 
on inept civilian leadership, ousted the civilian president who had 
led the country into the disastrous war. 

The 1952 Revolution reestablished civilian rule. Its leaders, mem- 
bers of the ruling Nationalist Revolutionary Movement, stopped 
short of completely disbanding Bolivia's army, however, when they 
realized that only it could control the increasingly militant peasants' 
and miners' militias. Although the leaders of the Nationalist Revolu- 
tionary Movement tried to keep the military subordinate, its power 
continued to increase. The force of military tradition eventually 
prevailed as the military seized power in 1964. From then until 
1982, Bolivia had eleven military governments. With its reputa- 
tion at a low point as a result of the corrupt and brutal dictator- 
ship of General Luis Garcia Meza Tejada (1980-81), the military 
returned to the barracks in 1982. 

A civilian president, democratically elected in 1980, was finally 
able to take office in 1982. By decade's end, Bolivia was still under 
democratic rule, and a more professional military had emerged. 
It had dissociated itself from Garcia Meza and purged its ranks 
of many officers who had been implicated in narcotics trafficking. 
Moreover, it had not reverted to its traditional pattern of inter- 
vention and coups. 

Bolivian-United States military relations improved considerably 
in the second half of the 1980s, when the United States once again 
became the principal source of foreign military assistance. In 1985, 
after an eight-year suspension, the United States renewed military 
aid. Although Bolivia did not have a guerrilla insurgency problem, 
joint Bolivian-United States counterinsurgency exercises were held 
in the eastern lowlands on two occasions, in 1986 and 1987, but 
public criticism forced the cancellation of the one scheduled for 1988. 
Nevertheless, United States military assistance continued, and some 
major civic- action projects were undertaken in 1989. 



221 



Bolivia: A Country Study 

As the world's second largest source of cocaine, after Peru, Bolivia 
had a major problem in the 1980s with narcotics trafficking and 
the accompanying violence, corruption, and drug abuse. Because 
it was the destination for an estimated 80 percent of Bolivian co- 
caine, the United States began providing significant assistance to 
the antidrug efforts of Bolivia's security forces. Special Bolivian 
antinarcotics police were created under a 1983 Bolivian-United 
States antidrug agreement. United States military personnel and 
equipment were used in Bolivia during the joint Bolivian-United 
States Operation Blast Furnace. The controversial operation marked 
the first time that the United States had committed military troops 
to a narcotics-control mission on foreign soil. 

Drug trafficking also became an increasing concern for Bolivian 
national security in the late 1980s, as wealthy traffickers, includ- 
ing Colombia's Medellin Cartel, lobbied for the Bolivian cocaine 
industry. This lobbying included bribing, intimidating, and assas- 
sinating government, judicial, military, and security officials; con- 
tributing to and discrediting political parties; instigating and 
financing militant demonstrations by coca growers; and develop- 
ing ties with local guerrilla or paramilitary groups. To counter these 
efforts, the 1985-89 government of Victor Paz Estenssoro signed 
another agreement with the United States in 1987. Paz Estenssoro 
subsequently revamped the antinarcotics structure and, in 1988, 
adopted a stringent antidrug law, which met with militant opposi- 
tion from the organized, coca-cultivating peasantry in Cochabamba 
and Beni departments. 

The Paz Estenssoro government also took steps to reform the 
overburdened judicial system, which was frequently corrupted by 
narcotics traffickers. In addition to dismissing a number of judges 
suspected of taking bribes, the government in 1988 created thir- 
teen special courts to expedite the prosecution of drug traffickers 
and the confiscation of their assets. 

Evolution of the Military Role in Society and 
Government 

Early History 

Bolivia's pattern of military revolts was established soon after 
independence in 1825, as one economic elite or another promoted 
its interests by backing a particular general or colonel. Soon after 
taking office, Marshal Andres de Santa Cruz y Calahumana (1829- 
39) created an armed forces command and organized an army of 
between 5,000 and 10,000 members; he also established the Mili- 
tary Academy (Colegio Militar) in 1835. The army was reorganized 



222 



National Security 



in 1839 following its decisive defeat by Chile in the Battle of Yungay 
and divided into regular and paramilitary forces. Six years of mili- 
tary service became obligatory for single men. After soundly defeat- 
ing the 5,400-member invading Peruvian forces in the Battle of 
Ingavi outside La Paz in 1841, Bolivia's army, with 4,100 mem- 
bers, was reduced to between 1,500 and 2,000 men. 

At the outbreak of the disastrous War of the Pacific in 1879, the 
army consisted of 690 officers and 2,165 other ranks, but it was 
able to mobilize about 12,100 men. Nevertheless, the Chileans easily 
defeated Bolivia's unprepared army, which had been weakened by 
years of declining military budgets. The Chilean armed forces killed 
5,000 Bolivian troops at Tacna on May 26, 1880, under the com- 
mand of General Narcisco Campero Leyes (see War of the Pacific, 
ch. 1). Although the incipient Bolivian naval force had played no 
role in the war, it lost its three warships and Bolivia's four Pacific 
Coast ports. Henceforth, Bolivian boats were limited to navigat- 
ing Lake Titicaca and Bolivia's lowland rivers. 

Postwar leaders attempted to create a more professional army. 
General Campero (1880-84), Bolivia's leading, European-trained 
army officer, removed its discredited older officers. Aniceto Arce 
Ruiz (1888-92) reopened the Military Academy in 1891 (closed 
since 1847), under the command of a Bolivian graduate of France's 
War School. The academy relocated from Sucre to La Paz in 1899. 
Arce also initiated a draft service and established the ■ 'Sergeant 
Maximiliano Paredes" Noncommissioned Officers School (Escuela 
de Clases "Sargento Maximiliano Paredes" — EC), in 1900. Despite 
these advances, the army was unable to defeat the secessionist move- 
ment in Acre (1900-1903), and Bolivia ceded the territory to Brazil 
in 1903 (see fig. 3). 

The Bolivian government sought European help in reorganiz- 
ing its army. As a result, the principal foreign influences on the 
army in the early twentieth century were French and German. In 
1905 Bolivia contracted with a five-member French military mis- 
sion, which, over the next four years, established a rudimentary 
armed forces General Staff (Estado Mayor General — EMG), a Staff 
College (Colegio del Estado Mayor — CEM), and a Reserve Officers 
School (Escuela de Oficiales de la Reserva). From 1911 until the 
outbreak of World War I, an eighteen-member German military 
mission directed the Military Academy and trained and advised 
the army, giving it a Prussian look but failing to enhance its mili- 
tary efficiency. Cut off from European sources of equipment and 
advice during the war, the army stagnated. 

Some German military advisers returned after the war, and one, 
General Hans Kundt, was named EMG chief in 1921, minister 



223 



Bolivia: A Country Study 

of national defense in 1925, and again EMG chief in 1931 (he was 
dismissed shortly thereafter for interfering in politics). During that 
period, Bolivia's military made some progress. By 1923 Bolivia 
had created the Aviation Corps (Cuerpo de Aviacion). It was ex- 
panded two years later into a military aviation service that included 
the ''German Busch" Military Aviation Academy (Colegio Militar 
de Aviacion "German Busch" — Colmilav). 

In 1924 the army was reorganized into divisions, each with six 
regiments. Under President Hernando Siles Reyes (1926-30), the 
army implemented a new organizational statute, established mili- 
tary zones, and reformed the curriculum of the Military Academy 
and CEM. It also established the Army Health Organization. 
Despite the improvements, the army was unable to defend Bolivia's 
borders when two years of mounting tension over the northern part 
of the Chaco region erupted into war with Paraguay in December 
1932 (see The Chaco War, ch. 1). 

The Legacy of the Chaco War 

From the outset of the Chaco War (1932-35), Bolivia's Avia- 
tion Corps — with forty-nine aircraft, including twenty-eight com- 
bat aircraft — established aerial superiority, flying frequent tactical 
support and bombing missions. Its transport element also was ac- 
tive in supplying the troops in the combat zone. Once mobilized, 
Bolivia's army consisted of nine divisions and more than 12,000 
troops, a number that later rose to 25,000. However, in addition 
to being ill equipped, poorly supplied, and disastrously led, the 
army consisted largely of homesick, bewildered highland Indians 
(indios) from the Altiplano (highland plateau) who had been con- 
scripted or impressed into service. They fought stubbornly and 
stoically, but the more resourceful, better-led, and determined 
Paraguayans, with a mobilized force of 24,000, gradually pushed 
them back. 

Throughout the Chaco War, Bolivia's army Staff (Estado Mayor — 
EM) feuded with the civilian leadership. The civil-military rela- 
tionship deteriorated, creating a legacy of bitterness that continued 
into the postwar period. The war was a humiliating defeat for 
Bolivia, as well as for its German-trained army. Of a total of 250,000 
Bolivian troops mobilized, as many as 65,000 were killed. 
Moreover, Bolivia not only had to give up most of the Chaco ter- 
ritory but also spent the equivalent of some US$200 million in its 
war effort, nearly bankrupting the already impoverished nation. 

As a consequence of the debacle in the Chaco, Bolivia's army 
became more politically aware and ready to act as an institution 
in pursuit of its own political goals. It began by deposing Daniel 



224 



National Security 



Salamanca Urey (1931-34), the elitist president who had led the 
country into its disastrous foreign war. For the first time since 1880, 
the army returned to power. Although both Bolivia and Paraguay 
were required by the terms of the armistice to reduce their armies 
to 5,000 men, Bolivia circumvented the restriction by creating a 
military police "legion" as an unofficial extension of the army. 

After the restrictions of the armistice lapsed with the signing by 
both countries of a peace treaty in 1938, Bolivia built up its bat- 
tered army. The army retained its basic prewar organization, 
although units formerly assigned to the Chaco were necessarily relo- 
cated. In an effort to professionalize the military, the regime of 
Colonel David Toro Ruilova (1936-37) invited an Italian military 
mission to establish two military academies in Bolivia: the Supe- 
rior War School (Escuela Superior de Guerra — ESG), the former 
CEM in La Paz for EMG officers; and the "Marshal Jose 
Ballivian" School of Arms (Escuela de Aplicacion de Armas 
"Mariscal Jose Ballivian" — EAA) in Cochabamba, primarily for 
junior officers. The new schools provided instruction for the first 
time in such subjects as sociology and political science. Neverthe- 
less, the Italian missions, along with other military missions from 
Spain and Czechoslovakia in the 1920s and 1930s, had little im- 
pact on Bolivia's Armed Forces (Fuerzas Armadas — FF.AA.). 

During this period, Bolivia and the United States also established 
close military cooperation for the first time. Beginning in 1941 and 
1942, United States aviation and military missions were active in 
Bolivia, and the country began receiving limited military aid under 
the wartime Lend- Lease Agreement. The United States air mis- 
sion reorganized the Aviation Corps into the Bolivian Air Force 
(Fuerza de Aviacion Boliviana — FAB), which remained subordinate 
to the army. 

Despite gradual improvements in professional standards, the mili- 
tary remained a traditional institution for decades after the Chaco 
War. The officer corps — divided and fractionalized by interservice 
rivalry, personal ambitions, differing ideological and geographical 
perspectives, and generational differences — was alternately domi- 
nated by reformists and conservatives. The reformist military re- 
gimes of three colonels — Toro, German Busch Becerra (1937-39), 
and Gualberto Villarroel Lopez (1943-46) — all contributed to the 
polarization of the officer corps along generational and ideological 
lines. The conservative business leaders who took power in 1946 
attempted to reverse the trend of military control of government 
by having military courts try more than 100 field-grade and junior 
officers for political activities proscribed by the constitution of 1947; 
many were convicted and discharged from the army. 



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Bolivia: A Country Study 

Reorganization of the Armed Forces, 1952-66 

The 1952 Revolution neutralized the army politically for a dozen 
years and redefined the military's role in society. Distrustful of the 
army, Paz Estenssoro 's Nationalist Revolutionary Movement 
(Movimiento Nacionalista Revolucionario — MNR) government 
(1952-56) immediately formed armed milicias populates (popular 
militias) composed of campesinos, miners, and factory workers. 
The militias in effect replaced the army and by 1953 were the stron- 
gest armed forces in the country. Instead of abolishing the army, 
which the MNR leaders soon realized was indispensable, the 
government largely demobilized and reorganized it. The govern- 
ment also reduced the army in size from approximately 20,000 to 
5,000 members, downgraded it in status, and slashed the military 
budget. In addition, the MNR imposed party control over the army 
by establishing celulas militares (military cells) and requiring the mili- 
tary to take an oath to the party. Author Charles D. Corbett esti- 
mates that no more than 300 officers actually were discharged or 
exiled, leaving 1,000 officers in the smaller army. He notes, 
however, that most senior officers were purged from the service. 

Paz Estenssoro succeeded in dominating the army, which exer- 
cised relatively little influence as an independent political force. 
It became involved primarily in civic-action projects, particularly 
in helping to colonize frontier areas. Other than establishing addi- 
tional engineer units, the army made little progress in developing 
militarily. Under Paz Estenssoro, the defense budget fell from 22 
percent of government expenditures in 1952 to 6.7 percent in 1957. 
Although the Paz Estenssoro government closed the Military Acad- 
emy for a year, it kept open the School of Arms and the "Marshal 
Andres de Santa Cruz" Command and Staff School (Escuela de 
Comando y Estado Mayor "Mariscal Andres de Santa Cruz" — 
EC EM), which had replaced the ESG in Cochabamba in 1950. 
Paz Estenssoro also formally established the "General Jose Manuel 
Pando" School of Military Engineering (Escuela de Ingeniena 
Militar "General Jose Manuel Pando" — EIM), which had already 
begun operating in La Paz in 1950. In addition to reestablishing 
the Military Academy in 1954, Bolivia began sending a few officers 
to attend the School of the Americas (Escuela de las Americas) in 
Panama. 

As the army declined, the militias grew in strength. By the end 
of Paz Estenssoro's first term in 1956, the militias numbered be- 
tween 50,000 and 70,000 men. The Paz Estenssoro government 
also thoroughly reorganized the police force, giving it more respon- 
sibility than the military (see The Security Forces, this ch.). 



226 



National Security 



The MNR government of Hernan Siles Zuazo (1956-60 and 
1982-85), uneasy about having to depend on the goodwill of the 
increasingly militant militias, began rebuilding the FF.AA. with 
the idea of keeping the force subordinate to the civilian govern- 
ment and involved primarily in civic-action projects (see Civic Ac- 
tion, this ch.). Historian Robert J. Alexander cites two additional 
reasons why the MNR government decided to revive the military. 
First, the government wanted to make use of the docile Indians, 
who, accustomed to being conscripted at the age of eighteen, con- 
tinued to present themselves to authorities for induction. Second, 
the government probably felt pressured by the United States to 
reestablish the regular armed forces and believed that increased 
United States economic aid was contingent on doing so. In an ef- 
fort to ensure that the new military would remain loyal, the civilian 
government gave preference in command appointments and pro- 
motions to military officers of known pro-MNR sympathies and 
permitted members of the lower class to enter the Military Acad- 
emy. As the MNR government became increasingly dependent on 
the army to control unrest, the military began to acquire some po- 
litical influence. 

In 1956 United States military instructors began teaching at the 
Military Academy. With the beginning of United States military 
assistance to Bolivia in 1958, military expenditures rose sharply 
and steadily. The United States also helped to strengthen the mili- 
tary with training and technical assistance. The army created an 
additional two divisions, raising the total to eight. The FAB, which 
became independent of the army in 1957, assumed responsibility 
for air defense, including the operation of antiaircraft artillery units. 

Although a landlocked country, Bolivia established a nascent 
naval force in the early 1960s when it acquired four patrol boats 
from the United States. The River and Lake Force (Fuerza Fluvial 
y Lacustre) was created in January 1963 under the Ministry of Na- 
tional Defense. It consisted of 1,800 personnel recruited largely 
from the army. Bolivia's naval force was rechristened the Bolivian 
Naval Force (Fuerza Naval Boliviana) in January 1966, but it also 
has been called the Bolivian Navy (Armada Boliviana). 

In his second term (1960-64), Paz Estenssoro continued the mili- 
tary buildup and made determined efforts to improve the training 
and equipment of the FF.AA., while preventing the militias from 
rearming. New military schools helped to improve the military's 
professional standards. The establishment of two new military or- 
ganizations indicated the military's growing political influence. One 
was the School of High Military Studies (Escuela de Altos Estu- 
dios Militares — EAEM), inaugurated in 1960 to educate senior 



227 



Bolivia: A Country Study 

civilian and military leaders on strategic issues affecting Bolivia. 
The EAEM was later renamed the School of High National Studies 
(Escuela de Altos Estudios Nacionales — EAEN), or National War 
College. The other was the Supreme Council of National Defense 
(Consejo Supremo de Defensa Nacional — CSDN), formed in 1961 
as ''the highest advisory body charged with problems of national 
defense." According to Corbett, the Supreme Council — which in- 
cluded the president, vice president, cabinet, chairmen of congres- 
sional committees, and the military high command — provided a 
structure for the FF.AA. to present its viewpoints on any national 
defense-related issue. 

By 1964 the army had increased to 15,000 members, and the 
military budget had grown to 14 percent of the national budget. 
Although the strength of the militias had dropped to about 16,000 
men by early 1963, the militias had not been replaced by an en- 
tirely apolitical army. Actually, by rebuilding the army Paz Estens- 
soro had unintentionally strengthened its political role, for its 
younger officers had few personal ties with the MNR political 
leadership. 

After leading a successful military coup against Paz Estenssoro 
in November 1964, FAB General Rene Barrientos Ortuno immedi- 
ately abolished the military cells that he, ironically, had headed. 
An elite nucleus of officers trained in the career school rose to power 
along with Barrientos (president, 1964-65; copresident, May 1965- 
January 1966; and president, 1966-69). Beginning with Barrientos 's 
coup, the military reemerged as a factor in Bolivian politics and 
would remain the dominant power in government until 1982. 
Although still fractionalized, it was the strongest and most impor- 
tant institution in Bolivia. The relative status of the military was 
illustrated by author James Dunkerley's observation that between 
1964 and 1966 the monthly pay of an army lieutenant rose to more 
than twice the average annual per capita income (US$120) and 
quadruple the salary of the highest grade of teacher. 

General Alfredo Ovando Candfa (copresident, May 1965-January 
1966, and president, January- August 1966 and 1969-70) became 
the most articulate advocate of a new, professional role for the army. 
Ovando is generally credited with modernizing the military by 
deemphasizing its traditional role and transforming it into an 
instrument of development and production. The Generational 
Group (Grupo Generacional), formed in 1965 and consisting of 
a few young, professionally oriented, reform-minded officers, also 
advocated a nationalistic program of reducing foreign influence in 
Bolivia and diversifying the economy. 



228 



National Security 



The Counterinsurgency Decade 

Historian Herbert S. Klein notes that a counterinsurgency policy 
to combat "internal subversion" became a major theme of United 
States training for the Bolivian army. In 1963 Argentine-trained 
Bolivian officers established the Center of Instruction for Special 
Troops (Centro de Instruccion para Tropas Especiales — CITE) 
under the Seventh Division in Cochabamba. In addition, by the 
end of 1963 Bolivia had more graduates from the United States 
Army Special Warfare School at Fort Bragg, North Carolina, than 
any other Latin American country. A total of 659 Bolivian officers 
received training at the School of the Americas in 1962-63, and 
20 of the 23 senior Bolivian officers attended or visited the school 
during 1963-64. United States military aid increased from 
US$100,000 in 1958 to US$3.2 million in 1964. This aid, which 
included weapons and training outside Bolivia, enabled Paz Estens- 
soro to strengthen the army more extensively than MNR leaders 
originally had intended. According to Klein, Paz Estenssoro con- 
stantly justified rearming the military to the United States "as a 
means of preventing communist subversion." 

In March 1967, Bolivia became a prime target of Cuban-supported 
subversion when Ernesto "Che" Guevara and his tiny National 
Liberation Army (Ejercito de Liberation Nacional — ELN) launched 
a guerrilla campaign. Despite its increased United States training, 
Bolivia's army still consisted mostiy of untrained Indian conscripts 
and had fewer than 2,000 troops ready for combat. Therefore, while 
the army kept the 40-man guerrilla group contained in a south- 
western area of the country, an 800-man Ranger force began training 
in counterinsurgency methods. With counterinsurgency instructors 
from the United States Southern Command (Southcom) headquar- 
ters in Panama, the army established a Ranger School in Santa Cruz 
Department. By late July 1967, three well- trained and well-equipped 
Bolivian Ranger battalions were ready for action. Supported by these 
special troops, units of the Eighth Division closed in on Guevara's 
demoralized, ill-equipped, and poorly supplied band. Guevara's cap- 
ture and summary execution on October 7 ended the ill-fated, 
Cuban- sponsored insurgency. 

The army's increased capabilities and its decisive defeat of the 
legendary Cuban guerrilla leader enhanced its prestige. The fact 
that Barrientos's vice president, Luis Adolfo Siles Salinas, a con- 
servative civilian, had to request permission from the military high 
command to assume his mandate after Barrientos's death in April 
1969 indicated how powerful the army had become as an institu- 
tion. 



229 



Bolivia: A Country Study 

Military Intervention in Politics, 1970-85 

Until 1970 reformist factions in the military had remained small 
and had gained significant influence only during the Barrientos 
administration. By 1970 the military's reformist faction, the Gener- 
ational Group, had about 100 members, most of them young 
officers. Historian Maria Luise Wagner postulates that the rise of 
Juan Jose Torres Gonzalez to the presidency (1970-71) marked 
the culmination of a reformist trend in the FF.AA. that had begun 
in 1936. The trend, however, reemerged in late 1978 when another 
reformist, David Padilla Arancibia (1978-79), who was favored 
by junior officers, took power (see Revolutionary Nationalism: 
Ovando and Torres, ch. 1). 

According to Klein, under General Hugo Banzer Suarez (1971 — 
78) "the role of the military was seen as one of protection of the 
upper classes and their middle-class allies, within non-democratic 
regimes." Thus, military intervention was regarded as "a long- 
term alternative to open politics." Although military cooperation 
with the United States grew considerably and the military budget 
increased under Banzer' s rule, the United States suspended military 
aid to Bolivia in late 1977 because of the regime's authoritarianism. 

During the Garcia Meza regime (1980-81), so many top officers 
were alleged to be involved in corruption and drug trafficking that 
both foreign and Bolivian officials called it "the cocaine govern- 
ment." As de facto president, Garcia Meza angered many officers 
by promoting a number of undistinguished colleagues — whose only 
merit appeared to be a record of loyalty to him — to top army posi- 
tions. Garcia Meza resigned and left the country in September 1981 , 
and the military finally stepped aside in October 1982 to allow the 
National Congress (hereafter, Congress) to reconvene and Siles 
Zuazo to begin serving out his truncated second term as president 
(October 1982 to August 1985). 

Three coup attempts against Siles Zuazo by dissident officers 
in June and December 1984 and January 1985 were thwarted be- 
cause the military, increasingly commanded by younger, more 
professional officers, remained loyal to the government. The mili- 
tary also honored the constitutional transfer of power to Paz Estens- 
soro in August 1985 for a four-year term in office (see Political 
Forces and Interest Groups, ch. 4). 

The Armed Forces 

Mission and Organization 

The fundamental mission of the FF.AA. is to defend and preserve 
national independence, security, stability, sovereignty, and honor; 
ensure the rule of the Constitution; guarantee the stability of the 



230 



National Security 



legally constituted government; and cooperate in the national de- 
velopment of the country. According to the 1967 Constitution, mili- 
tary personnel may not deliberate on or perform any political action, 
although this provision was often disobeyed in the past. In 1989 
the FF.AA. — consisting of the military high command and the 
army, air force, and navy — totaled 28,000 members. Conscripts 
accounted for about 19,000 armed forces members (army, 15,000; 
navy, 1,800; and FAB, 2,200). 

The Constitution makes the president of the republic head of 
the military, with the title of captain general of the armed forces 
(see fig. 12). The president appoints the commander in chief of 
the FF.AA., the chiefs of staff of the three military services, and 
other commanding officers. The president also proposes military 
promotions to Congress. Operational command of the FF.AA. is 
exercised jointly by the chiefs of staff through the Committee of 
Chiefs of Staff, a component of the EMG. Using other military- 
related presidential powers, the president may declare — with the 
approval of the Council of Ministers — a state of siege to deal with 
an emergency situation, but for a period not to exceed ninety days, 
except with the consent of Congress (see The Executive, ch. 4). 
Under a state of siege, the chief executive may increase the FF.AA. , 
call up the reserves, collect taxes, or negotiate loans. In 1986 the 
Paz Estenssoro government declared a state of siege to counter 
strikes by mineworkers and teachers; Congress approved a ninety- 
day extension. President Jaime Paz Zamora (1989- ) gave orders 
to the FF.AA., on administrative matters only, through the minister 
of national defense (for the army, navy, and air force). Headed 
by the president, the CSDN also serves as a body through which 
senior military officers advise the president and cabinet on national 
security matters. 

Another national security decisionmaking body, the National 
Security Council (Consejo Nacional de Seguridad — Conase), was 
under the EMG. In early 1989, Conase was directed by a general, 
who headed its Permanent Secretariat (Secretario Permanente). 

Under the Paz Zamora government, the minister of national 
defense was responsible for administrative supervision of the FF.AA. 
On technical matters and in the event of war, the military receives 
orders through the commander in chief of the FF.AA., a position 
that has been rotated among the three services every two years. 
Each service is headed by a commander, aided by a chief of staff 
(Jefe del Estado Mayor) and an inspector general. 

In November 1988, the military was pressing for constitutional 
reforms, involving nonmilitary as well as specifically military pro- 
visions. Proposals included defining the armed forces as "the 



231 



Bolivia: A Country Study 



SUPREME COUNCIL 
OF NATIONAL DEFENSE 
(CSDN) 2 





AIR 
FORCE 
(FAB) 4 


1 


TASK 
FORCE 


i 




STAFF 
(ESTADO 
MAYOR) 





AIR 
BRIGADES 

(13) 



AIR 
GROUPS 
(13) 



PRESIDENT 
(CAPTAIN GENERAL 
OF THE ARMED FORCES) 
(FF.AA.) 1 



MINISTER OF 
NATIONAL 
DEFENSE 



COMMANDER 
IN CHIEF, FF.AA. 



GENERAL STAFF 
(ESTADO MAYOR 

GENERAL) 
HEADED BY CHIEF 
OF STAFF 



NATIONAL 
SECURITY 
COUNCIL 
(Conase) 3 



ARMY 



STAFF 
(ESTADO 
MAYOR) 



STAFF 
(ESTADO 
MAYOR) 



MILITARY 
REGIONS 

(6) 



MILITARY 
DIVISIONS 

(10) 



NAVAL 
DISTRICTS 

(5) 



Fuerzas Armadas. 

Consejo Supremo de Defensa Nacional. 



1 FF.AA 

2 CSDN 

3 Conase -- Consejo Nacional de Seguridad 

4 FAB -- Fuerza de Aviacion Boliviana. 



Figure 12. Organization of the Armed Forces, 1989 



fundamental institution of the state, charged with the mission of 
preserving Bolivia's national independence, sovereignty and honor, 
territorial integrity, peace, and internal and external security; 
guaranteeing the stability of the legally constituted government; 
and cooperating in the integral development of the country." Sev- 
eral leading politicians saw the reference to the internal security 
role as a backdoor attempt to reintroduce the national security doc- 
trine that they claimed inspired most of the military coups. 



232 



National Security 



The Ministry of National Defense was organized into a minis- 
terial cabinet (gabinete ministerial) headed by the minister of national 
defense. Within the ministry were five general directorates: ad- 
ministration and budgets, logistics, territory, planning, and inter- 
nal management control. In addition to the directorates were the 
Subsecretariat of Maritime Interests, the National Directorate of 
Civil Defense, six military regions, and sixteen dependency di- 
visions. 

Army 

The army had a reported 20,200 members in 1989, including 
some 15,000 conscripts. Its equipment consisted mainly of light 
tanks, armored personnel carriers, towed artillery, and recoilless 
rifles (see table 16, Appendix). 

There were six military regions (regiones militares — RMs) in the 
army. RM 1, headquartered in La Paz, encompassed most of La 
Paz Department. RM 2, headquartered in Sucre, included Cocha- 
bamba Department and most of Chuquisaca Department. RM 3, 
based in Tarija, consisted of Tarija Department and eastern Chu- 
quisaca and Santa Cruz departments. RM 4, headquartered in 
Potosf, covered Oruro and Potosf departments. RM 5, based in 
Trinidad, contained most of Santa Cruz and Beni departments. 
RM 6, based in Cobija, encompassed Pando Department and parts 
of La Paz and Beni departments. 

The army was organized into ten divisions consisting of eight 
cavalry regiments: five horse units, two motorized units, and one 
assault group; one motorized infantry regiment with two battal- 
ions; twenty- two infantry battalions, including five infantry assault 
battalions; three artillery ''regiments" (battalions); five artillery 
batteries, including the Artillery and Antiair Defense Group (Grupo 
de Artilleria y Defensa Antiaerea — GAD A); one paratroop bat- 
talion; and six engineer battalions. These units included two armed 
battalions, one mechanized cavalry regiment, and one Presiden- 
tial Guard (Colorado) infantry regiment under direct control of 
the army headquarters in the Miraflores district of La Paz. 

Division headquarters were located in Cochabamba (the largest), 
Camiri (Santa Cruz Department), Oruro, Potosf, Riberalta (Beni 
Department), Robore (Santa Cruz Department), Santa Cruz, 
Trinidad, Viacha (La Paz Department), and Villamontes (Tarija 
Department). In 1987, however, the Ninth Division was established 
in Rurrenabaque in General Jose Ballivian Province of Beni Depart- 
ment. Each of the divisions, with the exception of Viacha, occupied 
a region generally corresponding to the administrative departments, 
with some overlapping. 



233 



Bolivia: A Country Study 

The town of Riberalta had three military bases. Two new bases 
were under construction in 1989 at Puerto Rico, near Riberalta, 
and at Porvenir, near the Brazilian border. Others, including those 
in Riberalta and at the departmental capital of Trinidad, were being 
modernized. 

The FF.AA. in the late 1980s continued to be incapable of ade- 
quately defending the country's extensive borders with Argentina, 
Brazil, Chile, Peru, and Paraguay. If attacked, Bolivia would have 
to seek assistance from friendly states. It was a member of the Inter- 
American Defense Board and a signatory of the Inter- American 
Treaty for Reciprocal Assistance of 1947 (also known as the Rio 
Treaty). Although no major border conflict had occurred since the 
Chaco War, Conase was concerned that all of Bolivia's contigu- 
ous neighbors had geopolitical objectives that threatened Bolivia's 
territorial integrity. The intentions of Brazil and Chile were par- 
ticularly worrisome to Conase. 

Navy 

Bolivia had a small navy, which in 1989 had approximately 3,800 
personnel, including 2,000 naval infantry personnel and marines, 
as well as about 1 ,800 conscripts. The navy's small motor launches 
operated mainly on Lake Titicaca and the numerous navigable 
rivers of the sparsely populated northeastern portion of the coun- 
try. The navy's riverine patrol duties included dislodging Brazilian 
and other foreign gold miners and interdicting smugglers of nar- 
cotics and contraband. Its areas of operation were divided into five 
(or possibly six) naval districts — Lake Titicaca, Rio Beni, Rio 
Madre de Dios, Rio Mamore, and Rio Paraguay — each with one 
flotilla. The five naval headquarters were located in Guaqui (on 
Lake Titicaca' s southern shore), Puerto Guayaramerin (on Rio 
Mamore), Puerto Suarez, Riberalta, and San Pedro de Tiquina 
(on Lake Titicaca' s eastern shore). Other bases were in Puerto 
Busch, Puerto Horquilla, Puerto Villarroel (on Rio Ichilo), 
Trinidad, and Rurrenabaque. The ' 'Admiral Grau" Marine In- 
fantry Battalion (Batallon de Infanterfa de Marina "Almirante 
Grau") was based at the Fourth Naval District, Titicaca, in 
Tiquina. 

In the late 1980s, the navy had several dozen boats in service, 
including about ten river patrol craft. It received its first United 
States-built, river-patrol launch, the twenty-meter Santa Cruz de la 
Sierra, in 1985. In 1986 the navy acquired nineteen outboard motors 
for its five- and six-meter patrol boats, effectively doubling its recon- 
naissance capability. Bolivia's only seagoing vessel, the Libertador 
Bolivar, was normally docked at Rosario on the Rio de la Plata in 



234 



La Paz as seen from El Alto 
Courtesy Harvey W. Reed 



Argentina and was used to and from Bolivian free zones in Argen- 
tina and Uruguay. The navy also had two Cessna aircraft (see 
table 18, Appendix). 

Air Force 

In 1989 FAB encompassed about 4,000 personnel (including 
about 2,200 conscripts). Its equipment comprised forty-five com- 
bat aircraft and ten armed helicopters (see table 19, Appendix). 
Although FAB's aircraft were mostiy of West European, Brazilian, 
and United States manufacture, in late 1988 the government was 
considering the purchase of Soviet cargo aircraft and helicopters. 

FAB was under the Ministry of National Defense (it had been 
under the Ministry of Aeronautics from 1980 to the Paz Zamora 
administration). FAB was organized into three air brigades with 
thirteen subordinate air groups. Its nine air bases were located 
at La Paz, Cochabamba, Santa Cruz, Puerto Suarez, Tarija, Vil- 
lamontes, Cobija, Riberalta, and Robore. Major brigade com- 
mands included the First Air Brigade (La Paz), Second Air Brigade 
(Cochabamba), Third Air Brigade (Santa Cruz), and Fourth Air 
Brigade (also called the Amazonas Air Brigade), created in 1987 
and headquartered in the Puerto Suarez area bordering Brazil. The 
First Air Brigade comprised the Air Fighters Group (Grupo Aereo 
Cazador — GAC) 31, Air Transport Groups (Grupos Aereos de 
Transporte) 71 and 72, and the National Service of Photogrammetry 



235 



Bolivia: A Country Study 

(Servicio National de Aerofotogrametrfa — SNA). GAC-31 received 
the first six of eighteen T-33A fighter aircraft from the United States 
in 1985. The Second Air Brigade included Cover Air Groups 41, 
51 , and 52. The Salvage and Rescue Air Group 51 (Grupo Aereo 
de Salvataje y Rescate 51 — GASR-51) was created in 1984, 
although predecessor units had operated since 1960. A similar unit, 
called the Search and Rescue Group 52 (Grupo Aereo de Biisqueda 
y Rescate 52— GABR-52) was established in Cobija in 1987. The 
Third Air Brigade consisted of Hunter Air Groups 32, 33, and 34, 
and Training Air Groups (Grupos Aereos de Entrenamiento — 
GAE) 21 and 22. GAE-21, which trained cadets of the Colmilav, 
acquired six T-23 Uirapuru trainer aircraft from Brazil and twelve 
Cessna A-152 Aerobat aircraft and three ATC-710 flight simula- 
tors from the United States in 1986. FAB also had Tactical Air 
Groups (Grupos Aereos Tacticos) 61 (in Robore), 62, and 63 (in 
Villamontes); the Group of Security and Defense of Air Installa- 
tions (Grupo de Seguridad y Defensa de Instalaciones Aereas — 
GSDIA); and GADA-91, GADA-92, and GADA-93. In March 
1989, FAB took a major step toward modernizing its force by in- 
augurating the General Command Systems Department in La Paz, 
equipped with sophisticated computers. 

Civil Aeronautics 

The General Directorate of Civil Aeronautics (Direction General 
de Aeronautica Civil — DGAC), under the direction of FAB (and 
formerly the Ministry of Aeronautics as well), administered a civil 
aeronautics school, the National Institute of Civil Aeronautics (In- 
stituto National de Aeronautica Civil — INAC), and two commer- 
cial air transport services: Military Air Transports (Transportes 
Aereos Militares — TAM) and Bolivian Air Transports (Transportes 
Aereos Bolivianos — TAB). The ministry also controlled the allo- 
cation of a large number of small civil aircraft acquired by FAB 
since the approval in late 1986 of the law on seizure of aircraft not 
registered at the ministry. INAC, which was headquartered in the 
Miraflores district of La Paz, graduated eleven new commercial 
pilots, sixteen maintenance technicians, and three FAB navigators 
in 1986. 

The transport service unit, which FAB refers to as TAM Group 
71, has been a part of FAB since 1945. TAM's inventory in the 
mid-1980s totaled 148 aircraft. Its commercial passenger flights to 
remote parts of Bolivia played a key role in unifying the country. 
TAM was commanded by the chief of TAM Group 7 1 . 

The other civil transport airline, TAB, was created as a decen- 
tralized company of FAB in 1977. Subordinate to the Air Transport 



236 



National Security 



Management (Gerencia de Transportes Aereos), TAB was headed 
by an FAB general. As a charter airline for transporting heavy 
cargoes, TAB linked Bolivia with most countries of the Western 
Hemisphere; its inventory included a fleet of Hercules C-130 air- 
craft. TAB's base of operations was headquartered in the FAB gar- 
rison of El Alto, adjacent to La Paz's international airport. TAB's 
most frequent route was to Miami and Houston, with stops in 
Panama. 

Other civil air functions of FAB or DGAC included operating 
rescue and airport security units. In 1986 the DGAC was study- 
ing the reactivation of the Air Rescue Service (Servicio Aereo de 
Rescate — SAR), which was apparently separate from FAB's 
GASR-51. The Airport Security (Seguridad de Aeropuertos) or- 
ganization was created under FAB in 1987 to provide security at 
airport terminals. Under the new organization, personnel from 
FAB, the Administration of Airports and Aerial Navigation Auxi- 
liary Services (Administration de Aeropuertos y Servicios Auxiliares 
de la Navegacion Aerea — AASANA), and the Military Police 
provided security at each airport. 

Civic Action 

The three military services contributed significantly to the na- 
tional welfare by performing various civic action functions through- 
out the country. These included constructing roads, airstrips, 
agricultural and industrial works, and schools; clearing land for 
colonization in eastern Bolivia; conducting literacy campaigns; and 
providing medical services to the civilian population living in the 
vicinity of bases. During his second term (1960-64), Paz Estens- 
soro gave the military an important role in social and economic 
development through the Civic Action Program, which the United 
States introduced in Bolivia. For example, the military began paving 
the Cochabamba- Santa Cruz highway, which opened up the fer- 
tile areas of eastern Bolivia to colonization. Although scanty financ- 
ing limited the army's contribution to economic development, in 
the mid-1980s almost all of the army's engineer units were engaged 
in civil engineering works, such as the construction of roads and 
bridges. 

FAB's two civil transport airlines — TAM and TAB — played a 
major role in civic action programs. TAM provided low-cost air 
services to the country's many remote areas, which were accessi- 
ble only by air but could not be served regularly and economically 
on a commercial basis. TAB also provided air support during 
natural disasters, in coordination with the Bolivian Red Cross and 
Civil Defense, by delivering food supplies. In early 1989, Bolivia 



237 



Bolivia: A Country Study 

purchased a Spanish CASA 212-M aircraft specifically for civil 
defense missions by the army and navy. The navy provided mo- 
bile medical clinics on the country's extensive navigable lake and 
river system and carried out comprehensive hydrological and hydro- 
graphic work and fisheries research, principally in the waters of 
Lake Titicaca. Because of the need for river bridges and maps, 
as well as flood-control studies, in 1964 the navy created the Naval 
Hydrography Service of Bolivia (Servicio de Hidrograffa Naval de 
Bolivia). In March 1989, the Bolivian Shipping Company (Empresa 
Naviera Boliviana — Enabol) delivered a new vessel to the navy for 
use in health and other civic action projects in Bolivia's eastern 
lowlands. 

Defense Budget 

Data on the Bolivian defense budgets varied widely in the late 
1980s. According to the International Institute for Strategic Studies, 
the 1988 defense budget was US$87 million. According to the 
United States government's The World Factbook, 1989, however, 
the military budget in 1988 was US$158.6 million. These figures 
were considerably higher than press reports that the defense budget 
fell from US$130 million in 1985 to US$94 million in 1986 but 
rose to roughly US$100 million in 1988. 

Despite a warning by the FF.AA. commander that a cut in the 
1988 funds would endanger Bolivian security and sovereignty, the 
Paz Estenssoro government reportedly earmarked only about 
US$98 million for the 1988 military budget. After meeting with 
the FF.AA. commander in July 1988, however, Paz Estenssoro 
ordered the minister of finance to give priority to the armed forces 
budget. The minister of national defense subsequentiy reported that 
the problem of military budget cuts had been overcome, mainly 
as a result of US$5 million in aid provided by the United States, 
and that FF.AA. personnel had received salary increases. 

Manpower and Training 

Conscription 

Since 1904 military service has been compulsory for all fit males 
between the ages of eighteen and forty-nine. In practice, however, 
budgetary limitations strictly limited the number of eligible men 
conscripted, and those traditionally tended to be mostly Indians. 
Beginning in 1967, conscripts were legally held on active duty for 
up to two years, but funds seldom permitted even a full year's ser- 
vice. Noncommissioned officers (NCOs) and warrant officers, all 
of whom were volunteers, generally were drawn from mixed-blood 



238 



National Security 



cholos (see Mestizos and Cholos, ch. 2). In the late 1980s, the ser- 
vice obligation was one year, and conscripts had to be at least 
nineteen years of age. The FF.AA. commander reported in early 
1989 that the largest percentage of conscripts came from the mid- 
dle class. One explanation for this change could have been the flock- 
ing of youths to the lucrative coca paste-making business. Military 
authorities in the Cochabamba area in particular began to ex- 
perience growing difficulty in enlisting volunteers in the mid-1980s. 
Consequently, the military reportedly was resorting to press-ganging 
eighteen-year-olds off the city streets to fill their annual quotas. 

Ranks, Uniforms, and Insignia 

The rank structure of the FF.AA. was conventional and con- 
formed to the pattern of the United States services, although minor 
variations reflected disparities in force levels. The army had nine 
officer ranks, ranging from second lieutenant to three general officer 
ranks: general de brigada (brigadier general); general de division (divi- 
sion general), which was equivalent to a United States major general 
or lieutenant general; and general de fuerza (force general), whose 
United States counterpart was general. The rank general de division 
was usually reserved for the FF.AA. commander and the minister 
of national defense, if the latter was a military officer, as well as 
the army commander and president of the Supreme Tribunal of 
Military Justice (Tribunal Supremo de Justicia Militar). 

Promotion from second lieutenant to first lieutenant, and from 
the latter to captain were made almost automatically after four years 
in each grade. Subsequent promotions were influenced greatly by 
completion of schooling, types of assignments, and performance 
ratings. Requirements included command of a unit, frontier ser- 
vice, and seniority. For promotion to major, lieutenant colonel, 
and colonel, five years in each grade were required. The Senate 
could veto a promotion to colonel or general. Army warrant officers 
and enlisted personnel ranged from private first class to sergeant 
major. 

FAB's nine officer ranks went from subteniente de aviacion (second 
lieutenant) to general de fuerza aerea (general). FAB's nine enlisted 
ranks began with the equivalent of airman basic and airman and 
ended with the equivalent of chief master sergeant. 

The navy's ten officer ranks ranged from alferez (ensign) to 
almirante (admiral), equivalent to a United States vice admiral. Naval 
warrant officers and enlisted personnel had ten ranks, from the 
equivalent of seaman recruit to fleet force master chief petty officer. 

Insignia of rank conformed to the designs adopted in 1968 
by the Central American Defense Council (Consejo de Defensa 



239 



Bolivia: A Country Study 

Centroamericano — Condeca). The commissioned officers' rank in- 
signia for the three services were as follows: the army had silver 
stars on a blue background with a red border for the equivalent 
of second lieutenant through captain, silver stars on a red stripe 
with a blue background for major through colonel, and gold stars 
on a gold stripe with a red background for generals; FAB had gold 
stars for second lieutenant through colonel and gold stars on a gold 
background for general officers; and the navy had traditional gold 
stripes on the lower sleeve. Enlisted personnel of all three services 
wore the following: the army had silver bars or stripes; the navy 
had red or gold stripes or gold bars; and FAB had a blue bar or 
gold stripes (see fig. 13; fig. 14). 

The military uniforms varied depending on climate and use — 
field, daily service, semidress, parade, ceremonial, and dress. Uni- 
forms for army officers, NCOs, and enlisted personnel were gener- 
ally gray or, for tropical areas, gray- green khaki. Naval uniforms 
for officers and NCOs were beige for cold climates, khaki for tem- 
perate areas, and white for lowland regions. Enlisted personnel wore 
the traditional blues and whites; their uniforms included a blue 
wool fatigue for cold climates and khaki or white uniforms for trop- 
ical areas, and black shoes. Officers and enlisted personnel in FAB 
wore blue squadron caps and blue uniforms for cold climates, and 
they wore khaki with blue garrison caps for tropical climates. 
Officers wore gray, green, or orange flight suits; enlisted person- 
nel wore orange or green flight suits. 

Military Schools 

Bolivia's military schools, with one exception, operated under 
the direction of a colonel who occupied the position of director of 
military institutes on the army's Estado Mayor (Staff). Through 
the Estado Mayor's National Directorate of Instruction and Teach- 
ing (Direccion Nacional de Instruction y Ensenanza), the direc- 
tor administered the school system from the army headquarters 
compound in La Paz's Miraflores district. The principal officer 
school complex was located in Cochabamba, however, under the 
jurisdiction of the Seventh Airborne Division commander. 

Most officers of the three services attended a five-year basic train- 
ing course at the "Colonel Gualberto Villarroel" Army Military 
Academy (Colegio Militar del Ejercito "Coronel Gualberto Vil- 
larroel" — CME) in Irpavi, a valley suburb of La Paz. Officers iden- 
tified with their Military Academy classes (promociones) through- 
out their military careers. To gain admittance, an applicant had 
to be Bolivian; single; a secondary school graduate (or pass a writ- 
ten examination with a high score); and under twenty years of age. 



240 



National Security 



The applicant also had to produce a health document, certificates 
of good moral character from both the national police and the local 
police, and a recommendation from a "responsible sponsor." Every 
December the school graduated about ninety-five cadets, who were 
commissioned as second lieutenants or ensigns. 

After a period of serving in units, Military Academy graduates 
proceeded to the specialist schools of their respective arms and ser- 
vices. Company-grade officers underwent a basic six-month course 
at the FF.AA.'s School of Arms in Cochabamba. After another 
year with a unit, they were required to attend a ten-month advanced 
course at this school. Army schools also included the Army Artil- 
lery School (Escuela de Artillena del Ejercito— EAE) and the EC 
in Cochabamba. The EC's three-year course graduated hardy and 
disciplined troops for crisis situations. NCOs generally did not play 
any political role. Special Forces training for select members of all 
three services was given at the Army Condors School (Escuela de 
Condores del Ejercito — ECE) in Sanandita, Tarija Department. 
Engineer officers in all three services, after three years of unit 
experience, enrolled in a five-year professional course at the EIM 
in La Paz. 

For promotion to field grade or for staff appointments, an officer 
had to graduate from the appropriate two-year courses of the EC EM 
in Cochabamba. Since the school's inauguration in 1950, ECEM 
graduates who met certain other requirements were awarded the 
title of staff graduate (diplomado de estado mayor — DEM), were enti- 
tled to use DEM following their rank, and became eligible for cer- 
tain key positions. The coveted title was required for command 
of tactical units or service on the Staff. Officers who had served 
at least two years as captains and received the top rating of "very 
good" from the School of Arms could apply to enroll in the two- 
year ECEM course. 

After spending a period with a unit, an ECEM graduate could 
enroll in a nine- to twelve-month course at the National War Col- 
lege (EAEN), the only military school not under the director of 
military institutes. Distinguished civilians, such as lawyers and 
university professors, with an interest in national security affairs 
could also enroll. Military graduates of the EAEN course were 
awarded the prestigious title of graduate of high national studies 
(diplomado de altos estudios nacionales — DAEN), whose initials replaced 
the staff designation of DEM. Few officers were promoted to colonel 
without having completed the EAEN course, a prerequisite for pro- 
motion to general officer. (President Torres worsened his strained 
relations with the army by appointing, as army chief of staff, a 
young reformist officer who had not graduated from the EAEN 



241 



Bolivia: A Country Study 




242 



National Security 



course.) Every year Bolivia also sent officers on training scholar- 
ships (becas) abroad, usually to Argentina, Brazil, Peru, or the 
United States. 

Air force officers completed the five-year course of the Military 
Academy in La Paz before being commissioned into FAB with a 
rank equivalent to second lieutenant. Officer pilots then transferred 
to the flying school in Santa Cruz for specialist training. Since 1955 
FAB's aeronautical training institute had been the Colmilav in El 
Trompillo, Santa Cruz Department. Colmilav included primary 
and basic training squadrons. Graduates of Colmilav were promoted 
to second lieutenant. The Colmilav student body totaled about 300 
cadets in 1988. Fewer than half of the 100 cadets who enrolled every 
year succeeded in graduating. 

FAB's first aerotechnical training school was the Polytechnical 
Military School of Aeronautics (Politecnico Militar de Aeronautica — 
PMA), established in 1953 and based in Cochabamba since Janu- 
ary 1987. The PMA graduated aviation technicians with the rank 
of first- sergeant technicians (sargentos primeros tecnicos). Its Febru- 
ary 1986 graduating class totaled thirty-five members. In January 
1986, the Technical Training School of the Air Force (Escuela de 
Capacitacion Tecnica de la Fuerza Aerea — ECT) was founded at 
El Alto Air Base outside La Paz. FAB officers received additional 
mid-career, postgraduate training at the EC EM in Cochabamba. 
The "General Rene Barrientos Ortuno" Air War School (Escuela 
de Guerra Aerea "General Rene Barrientos Ortuno" — EGA), 
which was inaugurated in 1973 for postgraduate studies, offered 
a command and staff course and, since February 1986, an air squad- 
ron course. A FAB group commander who used the title of gradu- 
ate of aerial military studies (diplomado de estudios militares aereos — 
DEM A) after his rank probably graduated from the EGA or EAEN. 
Many FAB officers also pursued additional courses of study abroad. 

Bolivia had several naval schools. An Argentine naval mission 
assisted in the creation of two naval schools located in Tiquina: 
the Naval Military School (Escuela Naval Militar — ENM), estab- 
lished in 1973 and attended by officers attached to the CME in 
Irpavi; and the "Dr. Ladislao Cabrera Vargas" Naval Staff College 
(Escuela de Estado Mayor Naval "Dr. Ladislao Cabrera Vargas" — 
EEMN), sometimes referred to as the Naval War College, for com- 
manding officers (jefes) and regular officers, which opened in 1970. 
Other naval schools included the Littoral Naval School (Escuela 
de Marinena Litoral — EML) in Trinidad, the Naval Technical 
School (Escuela Tecnica Naval— ETN) for NCOs, and the Naval 
Application School (Escuela de Aplicacion Naval — EAN) for 



243 



Bolivia: A Country Study 




244 



National Security 



subaltern officers. Naval personnel also continued to receive part 
of their training in Argentina. 

Military Justice 

As revised by the Banzer government, the 1978 Penal Code de- 
fined and established military jurisdiction over actions against the 
security of the state and against military personnel and property. 
It also established the military court system. The members of the 
FF. AA. are subject to certain military laws and regulations, which 
include the special Military Criminal Code and the Code of Crimi- 
nal Military Procedure. The Military Criminal Code establishes 
the death penalty for treason in its various forms, including dis- 
loyalty and espionage. FF.AA. members who commit criminal acts 
in the exercise of their specific functions are subject, depending 
on the nature of the offense, to military tribunals, which include 
disciplinary tribunals and courts of first instance, courts of appeal, 
and courts of nullity, without the intervention of the Supreme 
Tribunal of Military Justice. 

Military justice matters are adjudicated by the Permanent 
Tribunal of Military Justice and, in the highest instance, by the 
Supreme Tribunal of Military Justice, both of which were headed 
by generals in the late 1980s. Some military cases may be adjudi- 
cated by civilian courts once the defendants have been expelled from 
the FF.AA. For example, a group of five army officers, headed 
by the commander of the Seventh Division in Cochabamba, was 
dishonorably discharged from the army in October 1 988 after being 
caught protecting drug traffickers. Their case was turned over to 
civilian authorities three months later. In wartime, however, the 
military court has jurisdiction over the entire territory of the repub- 
lic. Even in times of peace, territories declared to be military zones 
fall under military jurisdiction, although in practice the standards 
of military criminal justice generally have not been applied in try- 
ing civilians. 

Foreign Military Assistance in the 1980s 

The United States 

United States military aid to Bolivia remained frozen for eight 
years until September 1985, shortly after Paz Estenssoro assumed 
office. In the second half of the 1980s, the United States continued 
its former role as Bolivia's principal foreign source of military 
assistance. The United States provided assistance through its 
Military Aid, Foreign Military Sales, and International Military 
Education and Training programs. In addition, Bolivian officers 



245 



Bolivia: A Country Study 

received training at the School of the Americas (relocated from 
Panama to Fort Bragg, North Carolina) in fields such as radio and 
communications . 

Bolivia and the United States also held two joint counterinsur- 
gency exercises and one major antinarcotics operation in eastern 
Bolivia during the 1986-87 period of the Paz Estenssoro govern- 
ment (see Narcotics Trafficking, this ch.). Code-named United 
Forces — 86, the exercises involved some 270 soldiers from South- 
corn and at least 1,000 Bolivian troops. 

Three weeks of counterinsurgency exercises known as Absalom 
or United Forces 87 — Bolivia were carried out in May 1987 with 
the participation of 350 United States troops and more than 1 ,000 
Bolivian soldiers. According to the Bolivian minister of national 
defense, their objectives were to bring the staffs of the three armed 
forces branches up to date on the modern methods of conventional 
and unconventional warfare, to train the FF.AA. in conducting 
field exercises, and to carry out civic action. In testimony before 
the United States Congress, the United States deputy assistant secre- 
tary of defense for drug policy and enforcement explained that the 
joint counterinsurgency exercises emphasized command, control, 
communication, and intelligence procedures, as well as tactical air, 
riverine, special, military police, and light infantry operations. 

In 1 988 United States aid to the Bolivian military was being fun- 
neled through the Armed Forces National Development Corpora- 
tion (Corporacion de las Fuerzas Armadas para el Desarrollo 
Nacional — Cofadena), headquartered in La Paz. One of the mili- 
tary regimes created Cofadena as an industrial, agricultural, and 
mining holding company and development organization. Military 
companies under its purview included the National Factory of Ex- 
plosives and Munitions (Fabrica Nacional de Explosivos y Muni- 
ciones — Fanexa). The FF.AA. also established its own commercial 
bank, the Banco del Progreso Nacional (National Progress Bank). 

In November 1988, Bolivia's minister of national defense an- 
nounced that the United States, at the request of the Bolivian 
government, would grant the nation US$25 million to modernize 
the FF.AA. over a five-year period. United States financial as- 
sistance to the FF.AA. totaled US$5 million in 1988 and US$5.3 
million in 1989. The military assistance agreement also included 
technical, training, and materiel aid. In January 1989, Bolivia's 
Congress authorized 300 United States military technicians, logisti- 
cal personnel, and soldiers to spend four months expanding the 
runway of Potosf's Captain Rojas Airport to 3,000 meters by level- 
ing a hill. Bolivia reportedly also agreed to receive three special 
United States military missions a year to train Bolivian troops. The 



246 



Plaza Avaroa, located in the Sopocachi suburb of La Paz 
Courtesy United States Department of State 

FF.AA. also acquired four Hercules C-130 aircraft in 1988, in ad- 
dition to equipment donated by the United States Army during 
previous exercises. 

Other Foreign Military Ties 

In the 1980s, Bolivia also began seeking military aid from other 
countries, such as the Federal Republic of Germany (West Ger- 
many) and China. A group of Bolivian military commanders visited 
West Germany in late 1985 to examine the role of a professional 
army in a democratic society. Taiwan ended its aid to the FF.AA. 
after Bolivia established relations with China in 1985. In the late 
1980s, Bolivia expected to reach a series of agreements to receive 
Chinese military training, arms, and other military equipment. 

The Security Forces 

Historical Background 

Although the marshal of Ayacucho, Antonio Jose de Sucre Alcala, 
had organized the first Bolivian police force on June 24, 1826, the 
National Police (Policia Nacional) was not established officially until 
1886. The Bolivian police became institutionalized on the national 
level in 1937 with the creation of the National Corps of Carabineers 
(Cuerpo Nacional de Carabineros) and its professional training 



247 



Bolivia: A Country Study 



school, the Police School (Escuela de Policia), later renamed the 
National Police Academy (Academia Nacional de Policias). The 
carabineers constituted a post-Chaco War merger of the Military 
Police, the Gendarmerie Corps (Cuerpo de Gendarmeria), the 
paramilitary Security Police (Policia de Seguridad), and the army's 
Carabineer Regiment (Regimiento de Carabineros). 

Unlike in most Latin American countries, Bolivia's police forces 
had always been responsible to the national government rather than 
to lesser political authorities. The concept of centralized police power 
is established by the Constitution. The Police Law of 1886 formal- 
ized the system that remained in effect throughout the first half 
of the twentieth century. In 1950 the Organic Law of Police and 
Carabineers of Bolivia (Law No. 311) revised the police system 
substantially. Law No. 311 and the 1886 law provide the legal basis 
for the present-day police system. 

Until the 1952 Revolution, the police corps was subordinate to 
the army and to the Ministry of National Defense. The army as- 
sumed most police functions and treated the corps as a reserve to 
be called on only in times of dire emergency. As a result of its ac- 
tive support of the 1952 Revolution, however, the national police 
received greater jurisdiction over police affairs and was modernized. 
It and the carabineers were transferred to the jurisdiction of what 
was then the Ministry of Interior, which concerned itself exclu- 
sively with administrative supervision. Nevertheless, the police 
resented being commanded by an army officer and having lower 
status and pay than the military. 

Mission and Organization 

The constitutional mission of the national police is to preserve 
public order, protect society through its specialized agencies, and 
guarantee enforcement of the laws. The police are also responsi- 
ble for protecting foreign diplomatic missions. The police do not 
deliberate or participate in partisan politics. The Constitution stipu- 
lates that the president of the republic is the commander in chief 
of the police forces (see fig. 15). In this capacity, the president — 
acting through the minister of interior, migration, and justice — 
names the director general of the National Police Corps (Cuerpo 
de Policia Nacional), another name for the national police. In a 
national emergency, the president is empowered to administer 
directly the activities of the police corps. In time of international 
war, the police forces would be subordinate to the FF.AA. com- 
mander in chief and the Ministry of National Defense for the du- 
ration of the conflict. In that event, the Constitution requires that 
police activities be integrated with those of the army as though the 



248 



National Security 



police were reserve units called to active duty for the duration of 
hostilities. The director general, who may be a civilian but almost 
invariably has been a high-ranking career police officer (usually 
with colonel rank), normally exercises operational control. 

The police corps, with at least 15,000 personnel in the late 1980s, 
consisted of the General Administration (Administracion General) 
section; the 5,000-member paramilitary National Guard (Guardia 
Nacional), still referred to as the carabineers (Carabineros), which 
were reorganized in 1976; the Directorate of National Investiga- 
tions (Direction de Investigaciones Nacionales — DIN), which 
cooperated with the International Police (Interpol); the Customs 
Police (Policia de Aduana); the Traffic Police (Policia de Transito); 
the National Highway Service (Servicio Nacional de Carreteras), 
which operated under the authority of the Ministry of Transport 
and Communications; the Fire Corps (Cuerpo de Bomberos), which 
was manned by police personnel; and the National Police Acad- 
emy. All of these subordinate entities were separate administra- 
tive units within the director general's office. This office, which 
also served as national headquarters for all police and national guard 
activities, consisted of a command group, or Police General Com- 
mand, which was established in the early 1980s, and a staff (Estado 
Mayor) made up of twelve numbered, conventionally established 
staff sections. 

Special Police Forces 

Other police forces under the Ministry of Interior, Migration, 
and Justice included antiriot, antinarcotics, and antiterrorist units. 
The Special Security Group (Grupo Especial de Seguridad — GES) 
was an operational, technical, and specialized unit. Its approxi- 
mately 450 members were organized into motorcycle companies. 
They were mobilized to reestablish public order or to respond to 
an attack against private property. Normally, they served in the 
Legislative Palace; Ministry of Interior, Migration, and Justice; 
and other public institutions; or in the national police's National 
Guard and DIN. 

The GES also assumed counterterrorist functions. In March 
1987, French police advisers and Bolivian experts began giving a 
three-month antiterrorism course — consisting of technical and psy- 
chological training — to 400 GES members. The purpose of the 
training was to form a special group for responding to hostage-taking 
incidents. That June the Bolivian police announced officially the 
creation of a twenty- two-member antiterrorist command, the Multi- 
purpose Intervention Brigade (Brigada de Intervention Polivalente — 
BIP), responsible for solving cases of "uncommon violence, ' ' such 



249 



Bolivia: A Country Study 



PRESIDENT 
(COMMANDER IN CHIEF) 



MINISTRY OF 
INTERIOR, MIGRATION, 
AND JUSTICE 





NATIONAL POLICE 
CORPS (DIRECTOR 
GENERAL) 

















SPECIAL 
SECURITY GROUP 
(GES) 1 



NARCOTICS 
POLICE 



STAFF 



MULTIPURPOSE 
INTERVENTION 
BRIGADE (BIP) 2 



SPECIAL 
ANTINARCOTICS 
FORCE 



RURAL AREA 

POLICE 
PATROL UNIT 
(UMOPAR) 3 



DIRECTORATE 
OF NATIONAL 
INVESTIGA- 
TIONS (DIN) 4 



NATIONAL 
GUARD 

(CARABI- 
NEERS) 



GENERAL 
ADMINIS- 
TRATION 



CUSTOMS 
POLICE 



NATIONAL 
HIGHWAY 
SERVICE 



TRAFFIC 
POLICE 



LA PAZ 
CARABINEER 
REGIMENTS (2) 



DEPART- 
MENTAL 
BRIGADES (9) 



NATIONAL 

POLICE 
ACADEMY 



FIRE 
CORPS 



FEMININE 
POLICE 
BRIGADE 



EXPLOSIVES 
BRIGADE 



Direct control 



GES -- Grupo Especial de Seguridad. 
BIP -- Brigada de Intervencion Polivalente. 
Umopar -- Unidad Movil Policial para Areas Rurales. 
DIN -- Direccion de Investigaciones Nacionales. 



Figure 15. Organization of the Police Forces, 1989 



250 



National Security 



as kidnapping, hostage taking, and outbreaks of subversion. The 
government of President Paz Zamora gave responsibility for anti- 
terrorist actions to the Special Elite Antiterrorist Force (Fuerza 
Especial Antiterrorista de Elite — FEAE). 

The narcotics police, with about 6,000 members, included the 
Special Antinarcotics Force (Fuerza Especial de Lucha Contra el 
Narcotrafico — FELCN), created in 1987, and a subordinate force, 
the Rural Area Police Patrol Unit (Unidad Movil Policial para 
Areas Rurales — Umopar). The Umopar, popularly known as The 
Leopards (Los Leopardos), was formed in late 1983 under a United 
States-funded program designed to eradicate the nation's cocaine 
trade and in accordance with four treaties on narcotics, signed by 
both countries on August 1 1 , 1983. By early 1989, the FELCN had 
its own intelligence service, which was charged with collecting evi- 
dence on individuals suspected of narcotics trafficking. 

Regional Police Structure 

The National Police Corps was a centralized force, organized 
on a territorial basis. Each department had a police district sub- 
divided into zones. Field elements of the National Police and Na- 
tional Guard were stationed in all sectors of the country and reported 
directly to the office of the director general in La Paz. Each depart- 
ment generally had one brigade (brigadd) of carabineers, consist- 
ing of an urban and a rural force. Subordinate headquarters (also 
known as brigades), stationed in the capital of each of the nine 
departments, coordinated and supervised operations. Each brigade 
was divided into an urban command and a rural command. The 
urban command, at the departmental capital, operated the police 
stations and local jails and was also divided into patrol and crimi- 
nal investigation sections. 

Most corps personnel and units within a department were 
considered — regardless of their size, composition, mission, or sta- 
tion — to be part of the brigade in the area they served and were 
members of a single departmental unit. An exception was the city 
of La Paz, where two separate regiments of carabineers were kept 
under the direct control of the director general and the president. 
Other exceptions to the integral brigade organization were made 
in sections of the country where dependence on the regular depart- 
mental brigade forces was not deemed advisable or feasible. Two 
such areas — San Ignacio de Velasco in Santa Cruz Department 
and Tupiza in Potosi Department — had independent carabineer 
detachments in addition to the department brigades. 

Certain departmental brigade personnel of the rural command 
were assigned to a series of frontier posts scattered at twenty-seven 



251 



Bolivia: A Country Study 

critical points along the borders and at river and lake ports of entry. 
They included Customs Police integral to the corps, as well as 
uniformed carabineers concerned with combating smuggling and 
other forms of illegal border crossing. The carabineers were also 
heavily involved in civic action in the more remote and less popu- 
lated regions of the country. In an effort to improve its public rela- 
tions, the police created the Department of Social Communication 
(Departamento de Comunicacion Social) in the early 1980s. 

Corps personnel were classified in three distinct groups: uni- 
formed personnel (carabineers); technical and auxiliary personnel; 
and civilian police investigators and identification personnel. Ranks 
of uniformed personnel generally corresponded to those of the army. 
There were four general classifications— jefes (field officers), oficiales 
(company officers), clases (NCOs), and tropas (privates) — with a 
graded system of rank within each class. Uniformed personnel were 
promoted on the basis of annual examinations given when they 
attained the required time in grade, which was usually four years 
for all except captains and sergeants, who must spend five years 
in grade before becoming eligible for promotion. Classification of 
civilians was based on a nonmilitary two-category system composed 
of superiors {funcionarios superiores) and subalterns (funcionarios sub- 
alternos). 

In the mid-1980s, approximately 80 percent of the National Police 
Corps were uniformed carabineers. The remaining 20 percent were 
civilian police investigators involved in crime detection, forensic 
science, administration, or logistics. Approximately half of the total 
uniformed personnel and 60 percent of the nonuniformed personnel 
of the police force were stationed in La Paz. The La Paz Depart- 
mental Police also had the Explosives Brigade (Brigada de Explo- 
sivos), which was subordinate to the Fire Corps. The 600-member 
Traffic Police administered traffic law. Only officers of this force 
normally carried sidearms. All motorcycle patrolmen were commis- 
sioned officers. The Feminine Police Brigade (Brigada Policial 
Femenina) served in an auxiliary or support capacity to the opera- 
tional units. In addition to directing traffic, members of this brigade 
helped in police matters involving children and women. 

All municipalities were entitled to raise local police forces to en- 
force local ordinances. Only La Paz, however, had established such 
a force, called the La Paz Municipal Police (Policfa Municipal de 
La Paz). In the mid-1980s, this force numbered about 400 uni- 
formed and 100 nonuniformed members, none of whom was armed. 
Their functions were limited to enforcing parking regulations and 
local bylaws. Most of the city of La Paz was under the jurisdiction 
of Police District No. 2, which consisted of five squadrons. Police 



252 



A police station in Villa Tunari, the Chapare 
Courtesy Kevin Healy 

District No. 3 was responsible for the sprawling shantytowns above 
the city known generally as El Alto. Police Regiment No. 4 exer- 
cised jurisdiction over the area south of La Paz. 

Recruitment and Training 

The police force was an unpopular career because of poor pay, 
conditions, and prestige and thus did not attract high-quality per- 
sonnel. But officers and higher civilian employees, who generally 
were drawn from the small urban middle class, were of relatively 
higher quality. Many officer personnel came from the army. Offi- 
cers were commissioned by graduation from the National Police 
Academy, by transfer from the army, by direct political appoint- 
ment for demonstrated ability, or by outright patronage. Civilians 
were nearly always political appointees. Although specialized edu- 
cation was not a prerequisite for a civilian's appointment, some 
degree of qualification was usually present and facilitated on-the- 
job training. Enlisted personnel received most of their training on 
the job during the first four months after enlistment. 

The academic year of the police education system began in Febru- 
ary. The Young Men's Basic Police School (Escuela Basica Poli- 
cial de Varones — EBPV), which had 120 students in 1983, provided 
a one-year training course at the operational level for subalterns 
of the national police. 



253 



Bolivia: A Country Study 

The National Police Academy offered a four-year course for 
officers. In the early 1980s, the academy's curriculum included 
criminal law, penal and civil investigation, criminology, ballistics, 
laboratory science, narcotics, vehicular and pedestrian traffic, order 
and security of persons and installations, martial arts, and human 
and public relations. The academy also offered a specialized course 
patterned on the counterinsurgency course of the United States 
Army Special Warfare School at Fort Bragg, North Carolina. The 
police academy additionally offered a program of foreign training 
for officers. Selected personnel were sent to training courses either 
in the United States or in neighboring countries, particularly 
Argentina, Chile, Paraguay, and Peru. On completing their courses 
abroad, these trainees returned to Bolivia for duty, to lecture at 
the academy, or to organize and conduct unit-level courses through- 
out the corps. 

In the past, admissions requirements for the academy gave 
greater importance to political reliability and unquestioned loyalty 
to the government than to education. By the early 1980s, appli- 
cants had to undergo medical, physical, and mental examinations, 
as well as tests of their general knowledge. Cadets accepted to attend 
the academy were not subject to the age limitations for enlisted 
military service. Matriculation exempted them automatically from 
their military obligations. The normal student body ranged from 
480 to 500 cadets divided into four courses. In 1983 the academy 
had very few women cadets, and the incorporation of women into 
police ranks was at an experimental stage. On graduation, which 
required passing an examination, cadets received a bachelor of hu- 
manities certificate, a saber to symbolize officer rank, and a com- 
mission as second lieutenant in the carabineers. Those graduates 
who were drawn from brigades then returned to their units to or- 
ganize local classes. 

The Higher Police School (Escuela Superior de Policias — ESP) 
was created in February 1969 for officers in the ranks of lieutenant 
colonel and above. The ESP prepared higher officers to manage 
the command departments, operational units, and training insti- 
tutes. In 1983 the ESP's student body consisted of fifty- seven higher 
officers. 

Threats to Internal Security 

Narcotics Trafficking 

By the late 1980s, Bolivians had become increasingly aware of 
the serious threat to their society posed by drug traffickers. One 
Bolivian editorial identified several dimensions of that threat: the 



254 



National Security 



existence of hundreds of clandestine airstrips in eastern Bolivia; 
flights of unidentified aircraft in Bolivian airspace; the presence 
of armed criminal groups; the disappearance of, and trafficking 
in, Bolivian passports; the intervention of officials of foreign govern- 
ments in Bolivia's affairs; the acceptance of foreign troops on Boliv- 
ian territory; corruption within the national security agencies and 
courts of justice; the growing control of mass media by narcotics 
traffickers; the spread of drug abuse among Bolivian youth; and 
the increased links between traffickers and guerrilla groups. 

Narcoterrorism 

An unwanted by-product of Bolivia's cocaine industry was the 
importation of Colombian- style drug violence. In the late 1980s, 
Colombia's Medellin Cartel reportedly wielded considerable power 
in Bolivia, setting prices for coca paste and cocaine and terrorizing 
the drug underworld with hired assassins. Furthermore, drug barons, 
organized into families, had established their own fiefdoms in 
Cochabamba, Beni, and Santa Cruz departments, using bribes and 
assassinations to destroy local authority. 

In September 1986, three members of a Bolivian scientific team 
were slain in the Huanchaca National Park in Santa Cruz Depart- 
ment shordy after their aircraft landed beside a clandestine coca- 
paste factory. The murders led to the discovery of the country's 
largest cocaine-processing installation, as well as evidence of an 
extensive international drug-trafficking organization consisting 
mosdy of Colombians and Brazilians. President Paz Estenssoro fired 
the Bolivian police commander and deputy commander as a result 
of their alleged involvement. In a related action, suspected traffickers 
in Santa Cruz murdered an opposition deputy who was a member 
of the congressional commission that investigated the Huanchaca 
case. 

In the late 1980s, there were several incidents of narcoterrorism 
against the United States presence, the judiciary, and antidrug 
agents. For example, the so-called Alejo Calatayu terrorist command 
claimed responsibility for a May 1987 bomb attack against the 
Cochabamba home of a United States Drug Enforcement Adminis- 
tration (DEA) agent. The Supreme Court of Justice, seated in Sucre, 
requested and received military police protection in mid- 1986. The 
Explosives Brigade successfully removed a live briefcase-bomb from 
the Senate library in August 1987. The so-called Santa Cruz Cartel, 
allegedly linked to the Medellin Cartel in Colombia, claimed 
responsibility for the machine-gun murders of two members of the 
FELCN in Santa Cruz in March 1988. Bolivians were also con- 
cerned about the increasing brazenness of Bolivia's drug traffickers, 



255 



Bolivia: A Country Study 

as demonstrated in August 1988 by a low-power dynamite attack 
on Secretary of State George P. Shultz's car caravan as it headed 
down from La Paz's Kennedy International Airport. The so-called 
Simon Bolivar Group and the Pablo Zarate Willka National Indi- 
genous Force (Fuerza Indigenista Pablo Zarate Willka — FIPZW) 
claimed responsibility. 

Narcotics Corruption 

Drug-related corruption reportedly began to take a firm hold 
within Bolivia's military and security services under General 
Banzer's rule (1971-78). The Garcia Meza regime (1980-81), 
however, was one of Bolivia's most flagrant examples of narcotics 
corruption. Garcia Meza's so-called cocaine coup was itself gener- 
ally believed to have been financed by the cocaine ' 'mafia," which 
bribed certain military officers. Garcia Meza reportedly ruled with 
an 44 inner cabinet" of leading civilians and military officers in- 
volved in the cocaine trade. Two of his ministers — Colonel Ariel 
Coca and Colonel Luis Arce Gomez — were well-known 4 'god- 
fathers" of the industry. By 1982 approximately 4,500 prosecu- 
tions were under way in connection with the embezzlement of state 
funds by civil servants, said to amount to a total of US$100 million. 

In early 1986, Congress charged Garcia Meza and fifty-five of 
his former colleagues with sedition, armed uprising, treason, geno- 
cide, murder, torture, fraud against the state, drug trafficking, 
crimes against the Constitution, and other crimes. In April 1986, 
however, the Supreme Court of Justice suspended the first hear- 
ing in Garcia Meza's murder trial, after his defense demanded the 
removal of three judges whom it charged had participated in Garcia 
Meza's military government. The Supreme Court of Justice sub- 
sequently voted to remove its president and two other justices from 
the trial. After Garcia Meza escaped from custody (he had been 
living under house arrest in Sucre) and reportedly fled the coun- 
try in early 1989, the Supreme Court of Justice vowed to try him 
and two accomplices in absentia. Governmental and military/police 
corruption under the Paz Estenssoro government (1985-89) was 
less flagrant than in the 1980-82 period of military rule. Neverthe- 
less, it reportedly remained widespread. 

In December 1988, Bolivia's foreign minister asserted that nar- 
cotics traffickers were attempting to corrupt the political process. 
Bolivians were outraged, for example, by secretly taped "narco- 
videos" made in 1985 by Roberto Suarez Gomez (known as the 
"King of Cocaine" in Bolivia until the mid-1980s) and aired on 
national television in May 1988. The tapes, provided by a former 
naval captain cashiered for alleged corruption, showed two promi- 
nent politicians from Banzer's Nationalist Democratic Action 



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(Accion Democratica Nacionalista — ADN) and military figures 
fraternizing with Suarez. 

The Umopar in particular had earned a reputation for corrup- 
tion, especially in the Chapare region. In 1987, according to Depart- 
ment of State and congressional staff, drug traffickers were offering 
Umopar officers and town officials in the Chapare region amounts 
ranging from US$15,000 to US$25,000 for seventy-two hours of 
' 'protection" in order to allow aircraft to load and take off from 
clandestine airstrips. In February 1988, the deputy minister of na- 
tional defense announced that about 90 percent of Umopar mem- 
bers, including twelve middle- and high-ranking officers, had been 
dismissed for alleged links to drug trafficking. The La Paz news- 
paper Presencia reported in March 1988 that Umopar chiefs, in- 
cluding the prosecutors, were working with narcotics traffickers by 
returning to them the large drug finds and turning only the small 
ones in to the authorities. Observers considered Umopar forces in 
Santa Cruz to be more honest and dedicated. 

In October 1988, the undersecretary of the Social Defense Secre- 
tariat reiterated that drug traffickers had obtained the protection of 
important sectors of influence in Bolivia, including some military 
members and ordinary judges. He cited the example of Cocha- 
bamba's Seventh Division commander and four of his top officers, 
who were discharged dishonorably after they were found to be pro- 
tecting a clandestine Chapare airstrip used by drug smugglers. The 
ministry official also announced that the navy was protecting drug- 
trafficking activities in the Puerto Villarroel area of the Chapare. 
For that reason, the United States suspended assistance to the navy 
temporarily in late 1988 until its commander was replaced. In De- 
cember 1989, Bolivia's antidrug police captured no less a drug 
trafficker than Arce Gomez, who was subsequently extradited to 
the United States. 

Bilateral and Legislative Antinarcotics Measures 

In February 1987, Bolivia and the United States signed a broad 
outline of an agreement on a three-year, US$300 million joint plan 
aimed at eradicating 70 percent of Bolivia's known coca fields. The 
new program included a one-year voluntary eradication phase and 
a program in which coca growers would be paid US$350 in labor 
costs and US$1 ,650 in longer-term development assistance for each 
hectare of coca destroyed. According to the Department of State's 
Bureau of International Narcotics Matters, Bolivia exceeded the 
voluntary coca reduction target for the September 1987 to August 
1988 period, destroying 2,000 hectares, or 200 more than required. 



257 



Bolivia: A Country Study 

To implement the 1987 agreement, the Paz Estenssoro govern- 
ment revamped the antidrug bureaucracy that had been established, 
incongruously, in 1981 during the Garcia Meza regime. The Na- 
tional Council Against the Unlawful Use and Illicit Trafficking of 
Drugs (Consejo Nacional Contra el Uso Indebido y Trafico Ilicito 
de Drogas — Conalid), presided over by the foreign minister, was 
charged with drawing up rules and regulations and creating new 
antidrug-trafficking measures. Two new secretariats were formed 
under Conalid. The Social Defense Subsecretariat (Subsecretaria 
de Defensa Social) was made subordinate to the Ministry of In- 
terior, Migration, and Justice and charged with interdiction. It also 
centralized all the activities of the National Directorate for the Con- 
trol of Dangerous Substances (Direccion Nacional para el Control 
de Substancias Peligrosas — DNCSP) and of the Umopar. The Sub- 
secretariat of Alternative Development and Substitution of Coca 
Cultivation (Subsecretaria de Desarrollo Alternativo y Sustitucion 
de Cultivos de Coca) and its Coca Eradication Directorate (Direc- 
cion de la Reconversion de la Coca — Direco) were charged with 
drawing up overall rural development plans for the areas affected 
by the substitution of the coca plantations. 

On July 19, 1988, to qualify for United States aid, Paz Estenssoro 
signed the Law of Regulations for Coca and Controlled Substances 
(Ley del Regimen de la Coca y Sustancias Controladas) — hereafter, 
the 1988 Antinarcotics Law. One of the strictest antinarcotics laws 
in Latin America, it aimed at eradicating illicit coca production 
and penalizing trafficking in drugs. As enacted by presidential 
decree in December 1988, the new law provided for a 10,000-hectare 
zone of legal coca cultivation in the Yungas region of La Paz Depart- 
ment and a small section of Cochabamba Department to meet tradi- 
tional demand (down from a previous total of 80,000 hectares for 
the Yungas and Chapare regions) (see fig. 16). It also provided 
for a transitional zone of excess production in the Chapare region 
subject to annual reduction bench marks of 5,000 to 8,000 hect- 
ares and provided for an illegal zone, comprising all territory out- 
side the traditional and transitional areas, in which coca cultivation 
was prohibited. The law prohibited the use of chemicals or herbi- 
cides for the eradication of coca, established that some 48,000 hect- 
ares of coca plantations would be eradicated over a five-year period, 
and set up a special judicial mechanism to deal with illegal drug 
trafficking. 

Under the 1988 Antinarcotics Law, drug traffickers could be sen- 
tenced to prison for anywhere between five and twenty-five years; 
manufacturers of controlled substances, five to fifteen years; sowers 
and harvesters of illicit coca fields, two to four years; transporters, 



258 



National Security 



eight to twelve years; and pisadores (coca stampers), one to two years. 
Minors under the age of sixteen who were found guilty of drug- 
related crimes would be sent to special centers until they were com- 
pletely rehabilitated. 

Shortly before the new law went into effect, a United States 
General Accounting Office report criticized Bolivia's methods of 
fighting drug trafficking. The study, whose undocumented gener- 
alizations about corruption reportedly irked Bolivian government 
officials, put the primary blame for the slow progress against drug 
trafficking on rampant corruption in Bolivia and "the unwilling- 
ness or inability of the government of Bolivia to introduce and im- 
plement effective coca control and enforcement measures." In 
rejecting the report, the minister of interior, migration, and justice 
noted in November 1988 that, in addition to arresting more than 
1,000 individuals on drug charges, Bolivia had eradicated some 
2,750 hectares of coca plantations, seized 22,500 kilograms of co- 
caine, and destroyed over 2,000 cocaine factories. Bolivian offi- 
cials also asserted that more than 1,660 antidrug operations during 
1988 had resulted in the destruction of from 1,000 to 1,400 clan- 
destine cocaine factories and laboratories (80 percent of them in 
Cochabamba and Santa Cruz departments), the confiscation of 
about 10,000 kilograms of cocaine, and the arrest of some 700 in- 
dividuals. The minister of planning and coordination stated in De- 
cember that 2,900 hectares of coca crops had been eradicated under 
the financial compensation program. 

Bolivia's antinarcotics units apprehended several prominent 
traffickers in 1988. At the same time that the 1988 Antinarcotics 
Law was promulgated, the Umopar arrested Suarez at his hacienda 
in Beni Department. According to one theory, Suarez allowed him- 
self to be arrested in a bid to avoid extradition to the United States 
(see The Criminal Justice System, this ch.). In October 1988, the 
FELCN captured an alleged drug "godfather," Mario Araoz 
Morales ("El Chichin"), by chance during a training exercise in 
a jungle area. In November antidrug police in the Chapare also 
arrested Rosa Flores de Cabrera, alias Rosa Romero de Humerez 
("La Chola Rosa"), described as one of the most-wanted women 
in the Bolivian drug-trafficking network, with connections to the 
Medellm Cartel. 

Under the government of Jaime Paz Zamora (1989- ), antidrug 
institutions were restructured, but Conalid remained the regula- 
tory body. Conalid directed the Permanent Executive Coordina- 
tion and Operations Council (Consejo Permanente de Coordination 
Ejecutiva y Operativa — Copceo). Like Conalid, Copceo was headed 



259 



Bolivia: A Country Study 



"... 



A 

BRAZIL x 

? 



— — International boundary 
® National capital 
• Populated place 



Coca-growing area 



50 100 150 Kilometers 
I — t -H h 1 

50 100 150 Miles 



Trinidad 




\ 

BRAZIL 

\ 



jSanta 
Cruz 




/ 



/ PARAGUAY } 

| ' . .-^ — > ' .' - 

s f '> 



ARGENTINA 



Source: Based on information from United States, Agency for International Development, 
A Review o/AID's Narcotics Control Development Assistance Program, Washington, 1986, E-2. 



Figure 16. Principal Coca-Growing Regions, 1985 

by the foreign minister, and its membership also included the 
ministers of interior, migration, and justice; planning and coordi- 
nation; social services and public health; agriculture, campesino 
affairs, and livestock affairs; education and culture; national defense; 
and finance. The new National Executive Directorate (Directorio 
Ejecutivo Nacional — DEN) was to support Copceo's plans and 



260 



National Security 



program dealing with alternative development, drug prevention, 
and coca-crop eradication. 

Antinarcotics Forces and Operations 

Under the 1983 antidrug agreement, which established the Umopar, 
the United States provided an initial US$4 million to form, train, 
and equip (with nonlethal items) 300 Umopar members and a 
30-member detective squad. In July 1984, the Siles Zuazo govern- 
ment undertook to dismantle the nation's billion-dollar drug in- 
dustry and ensure the receipt of a United States economic aid 
package by declaring the nation's principal coca- growing area, the 
Chapare, a military zone. The government sent in up to 1 ,500 sol- 
diers, including the Umopar, but withdrew the unpopular troops 
from the region by that September. Social scientist Kevin Healy 
observed that, with few exceptions, the Siles Zuazo government did 
not deploy police or military force to deal with the frequent peasant 
demonstrations against the drug war that took place throughout 
Bolivia during 1983-85. 

The more conservative Paz Estenssoro government adopted a 
harder line. Following a meeting of the International Drug En- 
forcement Conference in April 1986, the Paz Estenssoro govern- 
ment requested United States military assistance in reaching isolated 
areas where drugs were being processed. In early July 1986, after 
extended negotiations, the Ministry of Foreign Affairs and Wor- 
ship authorized the entry of United States troops to provide re- 
quested temporary logistical support for National Police Corps 
find-and-destroy operations against coca-processing facilities in the 
Chapare region, as well as in Beni and Santa Cruz departments. 
The resulting United States support operation — called Operation 
Bol-USA in Bolivia and Operation Blast Furnace in the United 
States — got under way later that month with the arrival at Santa 
Cruz's Viru-Viru International Airport of a United States C-5A 
Galaxy transport airplane carrying 160 United States Rangers from 
Southcom and about 15 DEA members, along with six Black Hawk 
transport helicopters. The operation involved the United States 
Army officers — experts in communications and mechanics — in 
training 1,000 Bolivian soldiers from all three services in counter- 
insurgency tactics and special police in antinarcotics actions. The 
role of the United States personnel was limited to transporting police 
antinarcotics forces by helicopter to drug installations, all of which, 
however, were found to be deserted, owing to publicity about the 
operation. 

The Bolivian government supported the operation despite nega- 
tive public reaction. After about 20,000 demonstrators in La Paz 



261 



Bolivia: A Country Study 

protested the continued presence of the United States troops in 
Bolivia in late August 1986, a majority in Congress approved the 
United States participation in the antinarcotics operation. To receive 
greater logistical support for antinarcotics efforts, the Bolivian 
government extended the presence of the United States troops in 
the country for a second sixty-day period. The United States ef- 
fectively ended the operation in mid-November 1986 by withdraw- 
ing its soldiers. Once they had departed, however, the coca trade 
flourished anew. 

The Paz Estenssoro government attempted to involve the FF.AA. 
in the antinarcotics struggle. In late 1986, it established a unit called 
the Operational Tasks Command (Comando de Tareas Opera- 
tivas — CTO) to coordinate police and military efforts. The govern- 
ment then formed the FELCN, which by 1988 consisted of 640 
Umopar members. Its creation also was intended to reduce the par- 
ticipation in antinarcotics matters of high-ranking police officers 
and to downgrade the Umopar. The FELCN was envisaged as 
drawing recruits from the FF.AA. , police, and other organizations, 
such as the GES. The Paz Estenssoro government agreed to pay 
for the maintenance of the new force's specialized troops, and the 
United States agreed to outfit it with US$123 million worth of 
helicopters, weapons, motorboats, and other equipment. Paz Estens- 
soro appointed a former FAB commander to head the FELCN 
general command and made the Umopar a subordinate unit. 

In 1987 the navy leased eight Piranha patrol boats from the DEA 
for riverine interdiction in Cochabamba and Beni departments. 
The Piranhas were to be staffed jointly by naval and antidrug police 
personnel, with assistance from DEA agents. 

FAB's involvement increased in September 1987 when it created 
the Task Force (Fuerza de Tarea) to provide air support for na- 
tional antinarcotics efforts. The new unit's inventory included six 
Huey UH-1H helicopters leased from the United States after Oper- 
ation Blast Furnace. The United States also provided a thirty-day 
training course taught by a team of twenty-eight United States mili- 
tary pilots and technical personnel. After forming its Task Force, 
FAB armed the unit's six Huey helicopters with machine guns in 
order to provide for the defense of law enforcement officials when 
they inspected drug crops. In 1987 three of the unit's Huey helicop- 
ters were deployed in Trinidad and at the forward base of San 
Javier, and the three others were in the Chapare. 

A United States congressional report issued in 1987 alleged that 
corruption and indifference among the Task Force's FAB pilots 
made their participation counterproductive. In any event, in its 
first year the Task Force completed 1,200 missions totaling 3,200 



262 




Antidrug agents unloading seized cocaine 
in Cochabamba Department 
Seizure of a cocaine laboratory in the Cochabamba Valley 



263 



Bolivia: A Country Study 

hours without incident (although three members were killed in 
February 1989 when their Cessna 206 crashed). In April 1989, the 
undersecretary of the Social Defense Secretariat reported that Task 
Force patrols in the Chapare had "completely paralyzed" the flights 
of small aircraft believed to be involved in drug trafficking. The 
Task Force was scheduled to receive an additional six Hueys in 
1989. 

In 1987 a United States Army Special Forces training team began 
a series of five-week training courses for Umopar personnel in topics 
such as operations and small-unit tactics, map reading, jungle sur- 
vival, and communications. The Chapare base camp in Chimore, 
a town on the road linking Cochabamba with Yapacani, served 
as the venue for conducting a basic course; the Umopar camp in 
Trinidad, capital of Beni Department, provided an advanced tac- 
tics course. According to the Department of State, six such courses 
were provided in 1987, and an additional six were planned for 1988. 
By mid-1988, 340 troopers, including 7 women, had graduated 
from the basic course and 200 from the advanced course. 

In the spring of 1988, the DEA and local authorities began a 
new round of antinarcotics programs called Operation Snowcap. 
DEA agents in teams of fifteen to twenty-five began serving in the 
Chapare on a rotating basis. The operation also involved mem- 
bers of the United States Army Special Forces, who were confined 
to military camps where they trained Bolivian troops. In addition, 
in simultaneous attempts to interdict laboratory chemicals being 
smuggled into the Chapare, United States Border Patrol agents 
aided Bolivian police at road checkpoints, while patrol boats plied 
rivers in the region. By April 1988, as a result of antidrug opera- 
tions mainly in the Chapare, where some 90 percent of the 300,000 
farmers in the region were involved in growing coca or processing 
and marketing coca paste, coca prices plummeted temporarily and 
dozens of coca fields went unharvested. 

Attitudes Toward Antinarcotics Forces 

The presence of the United States military forces in Bolivia in 
1986 created widespread controversy in the country. Although four 
political parties, including the ruling party and, belatedly, Con- 
gress approved the joint Bolivian-United States military exercises 
in the Chapare lowlands of Cochabamba Department from April 
26 to May 6, 1986, several leftist parties and civilian trade union 
and regional organizations opposed them as a violation of national 
sovereignty. Political and labor opposition groups, including the 
Bolivian Labor Federation (Central Obrera Boliviana — COB), 
formed a council to express their strong opposition to the presence 



264 



National Security 



of the United States forces and to challenge the legality of inviting 
foreign troops into the country without the prior approval of Con- 
gress. The most militant opposition came from workers, cam- 
pesinos, and other residents of the Chapare and Yungas regions 
who claimed that coca growing was their only means of making a 
living. Urged on by cocaine traffickers and peasant union federa- 
tions, coca farmers resorted to mass-mobilization tactics such as sit- 
ins, demonstrations, and road blockades. In one incident in Octo- 
ber 1986, some 6,000 residents of the Beni town of Santa Ana de 
Yacuma expelled 150 United States soldiers and Umopar members. 

In the late 1980s, the Bolivian press charged that DEA agents 
had killed a number of demonstrating peasants, protected the 
Huanchaca cocaine factory, and failed to combat the coca/cocaine 
industry. In July 1987, campesinos laid siege to a DEA camp in 
Chimore, forcing the temporary departure of twenty-five DEA 
agents and the relocation of the Umopar base. In May 1988, thou- 
sands of campesinos demonstrated for two days in downtown 
Cochabamba, demanding the expulsion of twenty DEA agents from 
Bolivia and governmental respect for their coca- growing livelihood. 
In order to get the coca growers to return home, the government 
agreed to modify the eradication plan. In addition to promising 
not to force any relocations, the government pledged to seek only 
voluntary reduction of coca fields, to decriminalize coca growing, 
and to seek more funds to develop other crops. 

Exercises called United Forces 88 scheduled for May 1988 were 
suspended, in part because of widespread complaints in the local 
press, Congress, and among political parties about the holding of 
the May 1987 Absalom exercises. Most of Bolivia's political par- 
ties denounced them as another violation of national sovereignty. 
The president dismissed his minister of national defense after the 
latter, inebriated, failed to provide a coherent explanation to Con- 
gress of why the government invited the United States troops to 
participate in the scheduled 1988 exercises. 

In the Chapare, where more than a dozen campesinos were 
reported killed by the Umopar in the 1986-88 period, charges of 
human rights abuses by antidrug forces helped drug traffickers to 
incite Chapare coca growers. The president of the Permanent As- 
sembly of Human Rights of Bolivia (Asamblea Permanente de 
Derechos Humanos de Bolivia) reported in 1988 that antidrug police 
routinely attacked coca growers, robbing them of money and goods. 
At the same time, the drug traffickers, better armed than the 
Umopar, methodically employed terrorist methods against Cha- 
pare residents who refused to cooperate with the cocaine industry. 



265 



Bolivia: A Country Study 

The 1988 Antinarcotics Law inflamed Bolivia's long tradition 
of nationalist, anti-imperialist, and anti- Yankee sentiment. Boliv- 
ians widely perceived the new law to be the result of unacceptable 
pressure on their government by the United States, which had 
linked coca eradication to the disbursement of loans to Bolivia by 
the United States, the World Bank (see Glossary), and the Inter- 
American Development Bank (IDB). The left-wing opposition, in- 
cluding the Free Bolivia Movement (Movimiento Bolivia Libre — 
MBL), joined forces with coca producers in opposing the law. 

Despite the adoption of the 1988 Antinarcotics Law and the 
government's claims of progress in the antidrug struggle, Boliv- 
ian officials and political leaders in early 1989 reportedly felt that 
enforcing antidrug measures through repression caused too much 
social and economic damage. In addition, repressive measures were 
met with violent resistance by coca growers and processors. In an 
apparent policy shift, Paz Estenssoro began advocating voluntary 
crop substitution and eradication. His government also began to 
seek US$600 million from wealthy nations to develop alternative 
agricultural crops and jobs, build roads, and install electricity in 
the Chapare. The Paz Estenssoro government also remained pub- 
licly opposed to the possible return of United States troops to 
Bolivia. 

Subversive Groups 

As of 1989, Bolivia had not been confronted with a significant 
subversive threat since the Cuban- supported guerrilla campaign 
led by "Che" Guevara in 1966-67 (see The Counterinsurgency 
Decade, this ch.). Other guerrilla bands, such as those operating 
in the area near Teoponte in the Yungas in 1969-70, were even 
shorter lived. A small group tried to set up a guerrilla unit in the 
Luribay Valley south of La Paz in 1983, but seven of its members 
were captured. 

Several international terrorist meetings were reported to have 
been held in Bolivia in the 1980s, including three in 1985 and 1986 
that were attended by terrorist representatives from other South 
American countries. Two meetings between Bolivian left-wing ex- 
tremists and representatives of other South American terrorist or- 
ganizations allegedly were held in Cobija, Pando Department, and 
in La Paz in 1985. According to the deputy minister of interior, 
migration, and justice, representatives of terrorist organizations 
from eight countries held another meeting in Santa Cruz in Febru- 
ary 1986. 

In early 1987, Peru's Sendero Luminoso (Shining Path) began 
to concern Bolivian civilian and military authorities after they 



266 



National Security 



learned that its strategic plan called for expanding terrorist actions 
into Bolivia and Ecuador. Various press reports in 1987 and 1988 
suggested that Sendero Luminoso guerrillas were using Bolivian 
territory, especially La Paz, to obtain medical assistance, medi- 
cine, food, weapons, and other supplies to support their revolu- 
tionary activities in Peru. 

A total of six international terrorist incidents took place in Bolivia 
in 1988, compared with three in 1987. A previously unknown group 
called the Revolutionary Labor Movement (Movimiento Obrero 
Revolucionario — MOR) claimed responsibility for assassinating the 
Peruvian military attache in La Paz in December 1988, an act that 
the Bolivian police commander attributed to Sendero Luminoso. 
A number of politically oriented terrorist incidents took place in 
the months leading up to the May 1989 elections. A terrorist group 
called the Zarate Willka Armed Forces of Liberation (Fuerzas 
Armadas de Liberacion Zarate Willka — FALZW), presumably 
another name for the FIPZW, took responsibility for a bombing 
in December 1988 that caused much damage to the offices of the 
president of the Chamber of Deputies and for machine gunning 
to death two young Mormon missionaries from Utah in a La Paz 
barrio in May 1989. Pre-election terrorism by unknown perpetra- 
tors in March 1989 included bombings at various political party 
offices in the La Paz area that caused considerable property damage 
and a bomb attempt at the United States embassy. 

Crime and Punishment 
The Criminal Justice System 

General Procedures 

The administration of justice in criminal matters was exercised 
by the ordinary courts and judges in accordance with the 1978 Law 
on Judicial Organization. The courts and the criminal procedures 
are rooted in the old Spanish and Napoleonic codes and are uni- 
fied in a single national system under the Ministry of Interior, 
Migration, and Justice. There are no jury trials, and the presid- 
ing judges base all decisions on their own evaluation of the data 
brought out during the proceedings. The Public Ministry, under 
the Ministry of Interior, Migration, and Justice, is intimately in- 
volved in court procedures involving public or civil cases in which 
the Penal Code has been violated. It is headed at the national level 
by two attorneys general (fiscales generates) who operate in the fields 
of criminal and civil law. Subordinate prosecutors {fiscales and sub- 
fiscales) are stationed throughout the country, where they serve in 
capacities similar to, but more wide-ranging than, those of state 
and district attorneys in the United States. 



267 



Bolivia: A Country Study 

The police are responsible for apprehending and arresting crimi- 
nals, although a citizen may arrest an offender if caught in the act 
of committing a crime. The Judicial Police (Policfa Judicial) is 
responsible for ascertaining and verifying crimes, collecting evi- 
dence, and delivering the suspects to the judges and tribunals for 
trial. The Traffic Police exercises functions of the Judicial Police 
in cases involving traffic accidents; authorities responsible for air, 
river, lake, and rail transport assume the same responsibility for 
cases involving their respective means of transport. 

The Constitution requires that police have a court order to make 
an arrest. An individual detained by the police in a local jail must 
be charged or released within twenty-four hours, except during a 
state of siege, when authorities may detain persons for up to forty- 
eight hours before obtaining an arrest order. During the initial 
period, a judge must determine the legality of the detention. Prison- 
ers are usually released if they are determined to have been de- 
tained illegally. After charging a detainee, the police notify the 
public prosecutor, who lodges a complaint before an investigating 
judge, who then assumes the case. An arrested suspect is presumed 
innocent until proven guilty and may consult a lawyer of his choice 
if charged with a crime. An individual charged with a crime may 
qualify to be released on bail, which is generally granted except 
in certain narcotics cases. 

In situations involving penal action, the office of the Public Minis- 
try is responsible for assembling the evidence and testimony and, 
with police assistance, studying the complaint, visiting the scene 
of the crime, and locating and interrogating witnesses. When the 
evidence, including depositions, is assembled, the investigating 
judge holds an open hearing before all interested parties. The public 
prosecutor makes an accusation and presents all witnesses and docu- 
ments for the prosecution. Witnesses deliver their testimony as a 
continuous narrative, without being questioned directiy or cross- 
examined. When the prosecution has finished, the judge interrogates 
the accused and receives depositions and statements from witnesses 
who may appear on behalf of the accused. Defendants have the 
right to an attorney, including a court-appointed defense attorney 
at public expense, if necessary, but a lawyer is not always provided 
because of a lack of funds and qualified attorneys. Defendants also 
have the right to confront witnesses, to present evidence, and to 
appeal a judicial decision. These rights generally are upheld in prac- 
tice. Although the constitutional right of fair public trial is adhered 
to, long delays in the judicial system are common, according to 
the United States Department of State. Investigations, trials, and 
appeals procedures are so lengthy that some prisoners eventually 



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National Security 



serve more time than the maximum sentence for the crime for which 
they were charged. A United Nations (UN) agency agreed in early 
1989 to provide assistance to improve the administration of justice 
in Bolivia. 

The trial judge reviews the investigating judge's summary and 
makes one of several possible determinations, in consultation with 
the public prosecutor. The trial judge may decide that the indict- 
ment is unwarranted and dismiss the case, or the trial judge may 
remand the case to the investigating judge for trial and deposition, 
depending on the seriousness of the crime. The trial judge also acts 
as a court of second instance for actions taken by an investigating 
judge. If the trial judge concurs in the decision by a lower court, 
the action is ended; a judge who disagrees may direct a retrial. 
The judge also considers appeals from decisions of the lower courts. 
If the trial judge decides to hear a new case, the proceedings are gen- 
erally similar to those in the lower court, but there are some im- 
portant differences. For example, the defendant must be represented 
by an attorney, either his own or one appointed by the judge. Addi- 
tional witnesses may be called — either for or against the defendant — 
if the judge feels that they may contribute to a better understanding 
of the case. The judge may also call on advisers when ready to study 
the data developed during the trial. Within three days after the 
trial's conclusion, the judge must confront the defendant and 
pronounce sentence. The district courts and the Supreme Court 
of Justice follow the same procedures for reviews and appeals. 

Extradition 

Under Article 3 of the Penal Code, no person who is subject to 
the jurisdiction of Bolivian laws may be extradited to another na- 
tion except by an international treaty or reciprocal agreement. 
Article 44 of the Constitution empowers the executive to deliver 
to a foreign government, under a reciprocal agreement, any in- 
dividual accused or indicted by the judges or tribunals of the for- 
eign country, as long as it involves a crime committed in its territory 
and the extradition conforms to international treaties. Presented 
with an extradition request, the Ministry of Foreign Affairs and 
Worship will pass it to the Supreme Court of Justice to establish 
the procedure for the extradition. Although a 1901 Bolivia-United 
States treaty provides for extradition, it does not specifically men- 
tion narcotics offenses. Nevertheless, both countries are signato- 
ries to the 1961 Single Convention on Narcotic Drugs, which 
provides that narcotics offenses are to be considered covered by 
all extradition agreements between signatory nations. 



269 



Bolivia: A Country Study 

Impact of Narcotics Trafficking 

In the late 1980s, there continued to be concern about an over- 
burdened and allegedly corrupt judicial system. According to the 
Department of State's Country Reports on Human Rights Practices for 
1988 and Bolivian press reports, judges were implicated in drug- 
related corruption. Narcotics traffickers routinely tried to bribe ju- 
dicial and other officials in exchange for releasing suspected smug- 
glers, returning captured drugs, and purging incriminating files. 
In 1988 the Senate's Constitution and Justice Committee ordered 
the suspension of thirteen judges of the La Paz, Cochabamba, and 
Santa Cruz superior district courts of justice for wrongdoing in drug- 
trafficking cases. The Supreme Court of Justice insisted, however, 
on its prerogative to try the judges first. After doing so, it ordered 
the suspension of several of the accused judges and continued to 
investigate others. 

Relatively few prosecutions or forfeitures of traffickers' assets 
took place. A lack of judicial investigatory power hampered the 
investigation of the bank accounts and the origin of wealth of peo- 
ple suspected of trafficking in drugs. Although thirteen of the "big 
bosses" reportedly had been identified by early 1988, arrests of 
drug kingpins were infrequently reported because of lack of 
evidence. 

In ruling on the 1986 Huanchaca case involving the slaying of 
a leading Bolivian scientist, his pilot, and a guide, the Third Crimi- 
nal Court of Santa Cruz returned a guilty verdict in April 1988 
against ten Brazilians and a Colombian, in addition to a Bolivian 
thought to be dead. The court, however, dismissed charges against 
five other Bolivian suspects, including several well-known drug 
traffickers. The freeing of two of the suspects by the Santa Cruz 
judges prompted the Supreme Court of Justice to demand the resig- 
nations of the entire Santa Cruz judiciary because of its leniency 
toward drug traffickers. Four Santa Cruz judges were dismissed 
because of irregularities in the Huanchaca case, which in early 1989 
remained at an impasse, under advisement in the Supreme Court 
of Justice. 

Under the 1988 Antinarcotics Law, the Judicial Police must 
report antinarcotics operations to the closest FELCN district within 
forty-eight hours. The law also called for the creation of three-judge 
Special Narcotics-Control Courts or tribunals (Juzgados Especiales 
de Narcotrafico) with broad responsibilities. In early 1989, the 
Supreme Court of Justice began appointing judges and lawyers 
to serve on the new tribunals, two of which began functioning as 
tribunals of first instance in narcotics-related cases, with jurisdiction 



270 



National Security 



for the judicial districts of La Paz, Cochabamba, Santa Cruz, and 
Beni. A total of thirteen Special Narcotics-Control Courts were sup- 
posed to be operating by mid- 1989, with two in each of the dis- 
tricts of La Paz, Cochabamba, Santa Cruz, and Beni and only one 
responsible for the five remaining departments. Their judges, ad- 
junct prosecutors, and support staff were to receive higher salaries 
than other judicial officials. However, the Paz Zamora government 
reportedly planned to disband these courts. 

The Penal System 

In arriving at a verdict, the judge considers the nature of the 
crime committed and the existence of special circumstances sur- 
rounding the case before imposing a penalty or punishment. The 
judge must give special attention to the criminal's intent. Bolivia's 
Penal Code distinguishes clearly between felonies and mis- 
demeanors. The former is committed voluntarily and in a spirit 
of malice; the latter, without malice. The Penal Code recognizes 
the following three types, or orders, of punishment that may be 
imposed on criminals, regardless of whether or not the offense was 
a felony or misdemeanor: corporal punishments that involve some 
form of restraint or restriction on the person of the offender, such 
as imprisonment; noncorporal punishments that call for nonphysical 
penalties, such as deprivation of a civil right, surveillance, bond- 
ing, or reprimand; and pecuniary punishments that exact a fine 
or other form of monetary payment. 

Although the 1967 Constitution abolishes capital punishment, 
it was restored in October 1971 for terrorism, kidnapping, and 
crimes against government and security personnel. In 1973 the 
Supreme Court of Justice upheld the constitutionality of Article 
109, one of several state security provisions of the Penal Code that 
entered into force in 1973, which mandates the death penalty, by 
firing squad, for any Bolivian who takes up arms against the na- 
tion, joins its enemies, or collaborates with the enemy in the event 
of a foreign war. In 1981 the death penalty was extended to drug 
trafficking. A death sentence could not be carried out, however, 
until the president decided against commutation. The president 
could commute the death penalty in favor of the second most se- 
vere punishment, which was thirty years at hard labor, with no 
recourse to pardon or clemency. 

Thirty years at hard labor was also mandated under Article 111 
(espionage) and Article 118 (sabotage). Under Article 133, terrorist 
actions carried a penalty of two to ten years in prison or, in the 
event of the death or severe wounding of the victim, twenty to thirty 



271 



Bolivia: A Country Study 

years. Engaging in armed actions against the security and sov- 
ereignty of the state was punishable under Article 121 by a pen- 
alty of fifteen to thirty years in prison. Article 128 provided that 
any attempt against the life or security of the president or other high 
government officials would be punishable by five to ten years of 
prison. Article 17 established that the penalties for drug- related 
offenses would never exceed thirty years' imprisonment. Most other 
crimes did not carry a greater penalty than ten years' imprison- 
ment. At the request of a condemned individual, a judge could 
also choose to suspend a sentence or grant a parole or conditional 
liberty. 

Bolivia's Penal Code also included a statute of limitations. A 
severe criminal offense could not be prosecuted unless the offender 
was brought to justice within ten years of the date of its commis- 
sion. Judicial pardon did not exist in the Bolivian penal system, 
but both the president and Congress had this power in certain lim- 
ited circumstances. Both were authorized to declare amnesty for 
political offenses, and Congress was empowered to pardon offenders 
in either criminal or civil cases, provided that the Supreme Court 
of Justice concurred. 

Bolivia had several penal institutions, including the San Pedro 
national penitentiary (known as Panoptico) in La Paz and one in 
each of the nine departments. Most departments had jails to ac- 
commodate local offenders whose crimes were serious enough to 
warrant long-term imprisonment. Other facilities included a cor- 
rectional farm at Caranavi in the Yungas, a reformatory for women 
at La Paz, and three reformatories for juveniles, one at La Paz 
and two near Cochabamba. These institutions, with the exception 
of the juvenile reformatories, were under the general supervision 
of the Ministry of Interior, Migration, and Justice, which assigned 
detachments of carabineers to provide guard and security forces. 

Conditions at the Caranavi correctional farm, where prisoners 
engaged in common work in the fields during the day, were better 
than in most penal institutions in Bolivia. Regulations there were 
strict, and prisoners were tightiy secluded in their cells at night under 
enforced silence. Communication with the outside world was regu- 
lated closely, and families were rarely permitted to visit inmates. 
Nevertheless, by being close to the source of food supply, the 
Caranavi prisoners had better meals than did inmates in urban 
prisons. The Women's Reformatory at La Paz, with a capacity 
for only thirty women, had the best conditions of all institutions 
in the system. It was operated under contract by a Roman Catholic 
order of nuns. 



272 



The treacherous road to Caranavi, 
Nor Yungas Province, La Paz Department 
Courtesy Inter-American Foundation (Kevin Healy) 

According to the Department of State, in 1989 there continued 
to be occasional reports of abuse of prisoners and detainees by in- 
dividual police and security officers, although the Constitution pro- 
hibits torture and the Siles Zuazo, Paz Estenssoro, and Paz Zamora 
governments neither condoned nor practiced such activity. Accord- 
ing to evidence made public in late 1989, forty or more severely 
mistreated prisoners were reported to have died and been secretly 
buried in a clandestine cemetery at the Espejos Rehabilitation Farm 
in Santa Cruz Department. Police, prison, and security personnel 
were rarely tried and punished for cruelty toward or degrading treat- 
ment of detainees. Corruption, malnutrition, and unsanitary con- 
ditions were endemic in Bolivia's underfinanced prison system. 
Although reportedly built at a cost of US$600,000, Santa Cruz 
Department's new Public Prison (Carcel Publica) for juvenile delin- 
quents, renamed the Santa Cruz Young Men's Rehabilitation 
Center (Centro de Rehabilitation de Varones Santa Cruz), was 
the site of inmate sabotage in early 1989. 

Incidence of Crime 

In the late 1980s, data on the incidence of crime in Bolivia either 
were not publicly available or were fragmentary. Until drug traffick- 
ing became pervasive in the 1980s, crime had not been exceptionally 



273 



Bolivia: A Country Study 

high and indeed was minimal. Petty thievery ranked high on the 
list of most common crimes. Also reported with considerable fre- 
quency were personal assaults, disorderly conduct, rape, and child 
neglect. Young men seemed to be involved in thievery more than 
in other forms of crime, whereas older men were more frequently 
arrested for acts of violence against other persons. The incidence 
of crime tended to be highest during holidays and festivals, when 
excessive drinking is common. 

Although crime statistics were unavailable, newspaper editori- 
als and reports indicated growing concern with a surge of violence 
and crime in the 1980s that included kidnapping, rapes of chil- 
dren, unsolved murders, and assaults with sophisticated lethal 
weapons against vehicles traveling on public roads. In November 
1988, a high-ranking police official discussed police concern about 
the high crime rate in La Paz, especially those crimes in which un- 
documented minors and foreigners were involved. A wave of kid- 
nappings was affecting Santa Cruz in the late 1980s. Victims 
included an agro-industrial businessman — a nephew of the Boliv- 
ian vice president — kidnapped in October 1987 and released a week 
later in exchange for a ransom payment of US$10,000; the son 
of the Bolivian State Petroleum Enterprise (Yacimientos Petroli- 
feros Fiscales Bolivianos — YPFB) president, held for a ransom of 
US$160,000; and an industrialist, released after payment of a 
US$100,000 ransom. There were no reports of political killings or 
politically motivated disappearances in Bolivia in 1988. 

* * * 

In mid- 1989 the scholarly literature on Bolivia's armed forces 
and other aspects of the country's national security remained lim- 
ited. Revolution and Reaction, the well-researched book by James M. 
Malloy and Eduardo A. Gamarra, gives in-depth analysis of mili- 
tary authoritarianism during the 1964-82 period. General surveys 
of Bolivia that provide some historical or political analysis of the 
military and security forces include Robert J. Alexander's Bolivia: 
Past, Present, and Future of Its Politics, James Dunkerley's Rebellion 
in the Veins, Herbert S. Klein's Bolivia: The Evolution of a Multi-Ethnic 
Society, and Malloy' s Bolivia: The Uncompleted Revolution. English- 
language studies focusing more on military institutions include 
Charles D. Corbett's The Latin American Military as a Sociopolitical 
Force and Adrian J. English's Armed Forces of Latin America. Rele- 
vant books by Bolivian authors include Guillermo Bedregal Gutie- 
rrez's Los militares en Bolivia, Guillermo Lora's Causas de la inestabilidad 
politicay de la crisis de las FF.AA., Jose Vargas Valenzuela's Tradicidn 



274 



National Security 



naval del pueblo de Bolivia, and former General Gary Prado Salmon's 
Poder y fuerzas armadas, 1949-1982. Useful historical background 
is also found in Maria Luise Wagner's dissertation, "Reformism 
in the Bolivian Military. ' ' Another dissertation on the military is 
James Dunkerley's "The Politics of the Bolivian Army." 

Kevin Healy's "Coca, the State, and the Peasantry in Bolivia, 
1982-1988" and "The Boom Within the Crisis" provide well- 
informed analyses of Bolivia's cocaine industry, particularly its rural 
impact. Useful information on narcotics issues is also contained 
in the United States General Accounting Office's Drug Control and 
the United States Congress's On-Site Staff Examination of Narcotics 
Control Efforts in Bolivia. An informative Bolivian account of Bolivia's 
struggle against narcotics trafficking is La Lucha boliviana contra la 
agresion del narcotrdfico by Guillermo Bedregal Gutierrez and Rudy 
Viscarra Pando. Some of the more revealing books published in 
Bolivia on narcotics issues include La veta blanca by Rene Bascope 
Aspiazu; Bolivia: Coca, cocatna, subdesarrollo y poder politico by Amado 
Canelas Orellana and Juan Carlos Canelas Zannier; and Narcotrdfico 
y politica, produced by the Instituto de Estudios Politicos para 
America Latina y Africa. 

Information on the Bolivian criminal justice and penal systems 
can be found in Fernando B. Aguirre's "The Legal System of 
Bolivia" in Kenneth Robert Redden' s Modern Legal Systems Cyclope- 
dia; Bolivia's Codigo penal; the Constitution of Bolivia in Gilbert H. 
Flanz, et al., Constitutions oj the Countries oj the World; and Country 
Reports on Human Rights Practices, a report submitted annually to 
the United States Congress by the Department of State. (For fur- 
ther information and complete citations, see Bibliography.) 



275 



Appendix 



Table 

1 Metric Conversion Coefficients and Factors 

2 Population and Growth Rate by Region, 1980-85 

3 Projected Rural and Urban Growth Rate, Selected Years, 

1990-2025 

4 Estimated Enrollment of School- Aged Population by Educa- 

tion Level and Sex, 1965, 1973, and 1987 

5 Probability of Dying Before Age Five by Region, Rural-Urban 

Breakdown, and Department, 1976 

6 Area and Output of Major Agricultural Commodities, 1984-88 

7 Exports and Imports of Major Agricultural Commodities, 

1984-88 

8 Production and Exports of Petroleum and Natural Gas, 1980- 

85 

9 Production of Selected Minerals, 1986 and 1987 

10 Exports, Selected Years, 1980-87 

11 Imports, Selected Years, 1980-87 

12 Balance of Payments, 1983, 1985, and 1987 

13 Law-Making Process, 1989 

14 Composition of the National Congress, May 1989 

15 Transition to Democracy, 1971-89 

16 Election Results, May 1989 

17 Major Army Equipment, 1989 

18 Major Naval Equipment, 1989 

19 Major Air Force Equipment, 1989 



277 



Appendix 



Table 1. Metric Conversion Coefficients and Factors 

When you know Multiply by To find 



Millimeters 0.04 inches 

Centimeters 0.39 inches 

Meters 3.3 feet 

Kilometers 0.62 miles 

Hectares (10,000 m 2 ) 2.47 acres 

Square kilometers 0.39 square miles 

Cubic meters 35.3 cubic feet 

Liters 0.26 gallons 

Kilograms 2.2 pounds 

Metric tons 0.98 long tons 

1.1 short tons 

2,204 pounds 

Degrees Celsius 9 degrees Fahrenheit 

(Centigrade) divide by 5 

and add 32 



279 



Bolivia: A Country Study 



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Bolivia: A Country Study 



Table 4. Estimated Enrollment of School-Aged Population 
by Education Level and Sex, 1965, 1973, and 1987 
(in percentages) 



Level 1965 1973 1987 



Primary school 

Male 86 91 94 

Female 60 62 81 

Both sexes 73 76 87 

Secondary school 

Male 21 28 38 

Female 15 20 32 

Both sexes 18 24 35 



Source: Based on information from World Bank, Social Indicators of Development, 1987, 
Washington, 1987. 



Table 5. Probability of Dying Before Age Five 

by Region, Rural- Urban Breakdown, and Department, 1976 

Before Before Before 

Age One Age Two Age Five 

Region 

Altiplano 16 .22 .27 

Yungas and other valleys 17 .23 .28 

Lowlands 11 .15 .17 

Area 

Urban 12 .17 .19 

Rural 17 .24 .29 

Department 

Beni 11 .14 .17 

Chuquisaca 18 .26 .32 

Cochabamba 17 .24 .29 

La Paz 14 .20 .23 

Oruro 16 .22 .27 

Pando 13 .18 .21 

Potosf 20 .28 .35 

Tarija 13 .17 .20 

Santa Cruz 12 .16 .18 

Source: Based on information from United Nations Educational, Scientific and Cultural 
Organization, Oficina Regional de Educacion de la UNESCO para America La- 
tina y el Caribe, Informaciones estadisticas de la educacion y andlisis cuantitativo, Santi- 
ago, Chile, July 1983, 38. 



282 



Appendix 



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Appendix 



Table 8. Production and Exports of Petroleum 
and Natural Gas, 1980-85 



1980 1981 1982 1983 1984 1985 



Production 

Crude petroleum 1 1,384 1,286 1,418 1,288 1,211 1,152 

Refined products 1 1,503 1,352 1,373 1,242 1,234 1,220 

Natural gas 2 ' 3 4,780 4,969 5,320 5,041 4,905 4,644 

Exports 

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n.a. — not available. 

1 In thousands of cubic meters. 

2 Includes rejected gas. 

3 In millions of cubic meters. 

Source: Based on information from Economist Intelligence Unit, Country Profile: Bolivia, 
1988-89, London, 1988, 16. 



285 



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288 



Appendix 



Table 12. Balance of Payments, 1983, 1985, and 1987 
(in millions of United States dollars) 







lyuo 


198/ 




755.1 


623.4 


470,0 


I. xlllJKJl IS Ul cUUUo •••••••••••• 


-496.0 


-462.8 


-658.0 




259 1 


160.6 


-188.0 


vnnrt? r%f Q^i*\7ir , f»Q 


143 9 


1 14.0 


143.0 




-647.3 


-636.5 


-572.0 


Net private transfers 


40.2 


19.7 


20.2 




65 2 


59.8 


109.0 


Subtotal 


-398 


-443.0 


-299.8 


Current account balance 


-138 9 


-282.4 


-487.8 




6.9 


10.0 


22.0 




-1.8 


-0.9 


n.a. 


Other long-term capital 


-221.2 


-243.9 


-90.8 




-113.5 


-2.2 


7.8 




-329.6 


-237.0 


-61.0 


Errors and omissions 


71.5 


187.9 


-1.2 




6.0 


3.7 


-23.8 




668.4 


352.6 


441.8 




-230.4 


-62.7 


40.9 


Change in reserves 2 


-47.0 


37.9 


91.1 



n.a. — not available. 

1 Free on board. 

2 Minus sign indicates increase in reserves. 



Source: Based on information from Economist Intelligence Unit, Country Profile: Bolivia, 
1988-89, London, 1988, 23-24. 



289 



Bolivia: A Country Study 



Table 13. Law-Making Process, 1989 



Step Description 



Step 1 Bill is introduced in either chamber by senators, deputies, vice presi- 
dent, cabinet members, or president. House where bill is introduced 
becomes chamber of origin; "review chamber" is second chamber. 

Step 2 Bill may be voted on or sent to committee for a report. 

Step 3 If bill is sent to committee, committee must submit report on bill 

before whole chamber. Bill is either approved, rejected, or sent 
back to committee. Once a bill is rejected, it cannot be resubmit- 
ted in either chamber until next legislative year. 

Step 4 Bill is introduced in review chamber, where it must go through same 

process. 

Step 5a If bill is modified in review chamber, it is sent back to first chamber. 

Step 5b If review chamber rejects bill, it cannot be reintroduced until next 

legislative year. 

Step 6 If revisions of bill are not accepted by first chamber, president of 

either chamber must convoke a joint session within twenty days. 

Step 7 A bill approved by both houses is sent to president, who has ten days 

to take action. 

Step 8a If president takes no action within ten days, bill becomes law. If legis- 
lative year ends before the ten days are over, president may in- 
troduce reforms in next legislative year. 

Step 8b If president makes modifications, bill must be sent back to chamber 

where it was introduced. If changes are approved by both houses, 
bill must be returned to the president for signing. 

Step 9 If both chambers reject president's changes, a two-thirds majority 

can overturn a presidential veto. 



Source: Based on information from Eduardo A. Gamarra, "Political Stability, Democrati- 
zation, and the Bolivian National Congress," Pittsburgh, 1987. 



290 



Appendix 



Table 14. Composition of the National 
Congress, May 1989 

Chamber of 
Senate Deputies Total 



MNR 1 9 40 49 

ADN 2 8 38 46 

MIR 3 8 33 41 

Condepa 4 2 9 11 

IU 5 10 10 

TOTAL 27 130 157 



1 Movimiento Nacionalista Revolucionaria (Nationalist Revolutionary Movement). 

2 Accion Democratica Nacionalista (Nationalist Democratic Action). 

3 Movimiento de la Izquierda Revolucionaria (Movement of the Revolutionary Left). 

4 Conciencia de la Patria (Conscience of the Fatherland). 

5 Izquierda Unida (United Left). 



291 



Bolivia: A Country Study 




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Appendix 



Table 16. Election Results, May 1989 



Number of Percentage 
Party Candidates Votes of Vote 

MNR 1 Gonzalo Sanchez de Lozada 363,113 23.1 

Walter Guevara Arze 

ADN 2 Hugo Banzer Suarez 357,298 22.7 

Luis Ossio Sanjines 

MIR 3 Jaime Paz Zamora 309,033 19.6 

Gustavo Fernandez 

IU 4 Antonio Aranibar 113,509 7.2 

Walter Delgadillo 

Condepa 5 Carlos Palenque 173,459 11.0 

Jorge Cusicanqui Escobari 

PS-1 6 Roger Cortez 39,763 2.5 

Jerjes Justiniano 

MRTK 7 Victor Hugo Cardenas 22,983 1.5 

Emmo Valeriano Thola 

FULKA 8 Genaro Flores 16,416 1.0 

Hermogenes Basualdo 

FSB 9 Rommel Pantoja 10,608 0.7 

Nestor W. Cerruto 

MIN 10 Luis Sandoval Moron 9,687 0.6 

Oscar Garcia Suarez 

Blank 11 n.a. 68,626 4.4 

Null 12 n.a. 89,295 5.7 

TOTAL 1,573,790 100.0 



n.a. — not applicable. 

1 Movimiento Nacionalista Revolucionario (Nationalist Revolutionary Movement). 

2 Accion Democratica Nacionalista (Nationalist Democratic Action). 

3 Movimiento de la Izquierda Revolucionaria (Movement of the Revolutionary Left). 

4 Izquierda Unida (United Left). 

5 Conciencia de la Patria (Conscience of the Fatherland). 

6 Partido Socialista Uno (Socialist Party One). 

7 Movimiento Revolucionario Tupac Katari (Tupac Katari Revolutionary Movement). 

8 Frente Unica de Liberation Katarista (Sole Katarista Liberation Front). 

9 Falange Socialista Boliviana (Bolivian Socialist Falange). 

10 Movimiento de la Izquierda Nacionalista (Nationalist Leftist Movement). 

11 Ballots not filled out. 

12 Ballots nullified for some reason, e.g., defaced. 

Source: Based on information from "Final Official Vote Count," Presencia [La Paz], May 28, 
1989, 1. 



293 



Bolivia: A Country Study 

Table 17. Major Army Equipment, 1989 

Country 

Type and Description of Origin Inventory 
Light tanks 

Alvis Scorpion Britain 12 

Steyr Sk 105mm Austria 36 

Armored combat vehicles 

EE-9 Cascavel Brazil 24 

Kiirassier tank destroyers West Germany 18 

Armored personnel carriers 

M-113 United States 50 

V-100 Commando -do- 15 

MOW AG Roland France 24 

EE- 11 Urutu Brazil 24 

Artillery 

M-116 75-mm Pack howitzers United States 6 

M-101 105-mm howitzers -do- 6 

Bofors M-1935 75-mm guns Sweden 10 

FH- 18 howitzers n.a. 20 

Recoilless rifles 

90-mm United States 50 

M-40A1 106-mm -do- n.a. 

Mortars 

60-mm -do- n.a. 

M-30 107-mm -do- n.a. 

M-29 81 -mm -do- 250 

Aircraft 

Beech Super King Air -do- 1 

Piper Cheyenne II -do- 1 

Casa C-212 Spain 1 

n.a. — not available. 

Source: Based on information from The Military Balance, 1989-1990, London, 1989, 184; 
and "World Defence Almanac," Military Technology [Bonn], 13, No. 1, January 
1989, 42. 



294 



Appendix 



Table 18. Major Naval Equipment, 1989 



Type and Description 



Country 
of Origin 



Patrol launch 

Hospital-type patrol launch 



-do- 
n.a. 



Inventory 



Patrol craft 

Various sizes n.a. 

Piranhas United States 



Sea-going vessel Venezuela 

Hydrographic research ship n.a. 

Transport ship n.a. 

Aircraft 

Cessna 402 United States 

Cessna 206 -do- 

n.a. — not available. 

Source: Based on information from The Military Balance, 1989-1990, London, 1989, 184; 

and "World Defence Almanac," Military Technology [Bonn], 13, No. 1, January 
1989, 42 



295 



Bolivia: A Country Study 

Table 19. Major Air Force Equipment, 1989 

Country 

Type and Description of Origin Inventory 
Fixed-wing fighters 

AT-33N Canada 14 

F-86F Sabre United States 4 

Hughes 500M -do- 10 

Counterinsurgency 

AT-6G n.a. 12 

PC-7 Switzerland 12 

Fixed-wing utility 

Cessna United States 24 

Trainers 

T-41D Mescalero -do- 6 

Cessna 172 -do- 3 

Cessna 310 -do- 2 

Cessna A- 152 -do- 12 

T-23 Uriapuru Brazil 18 

SF-260CB Italy 6 

SF-260M -do- 3 

PC-7 Switzerland 24 

T-33A United States 18 

Transports 

L-188 Electra -do- 1 

Sabreliner 65 -do- 1 

Super King Air -do- 3 

Cessna -do- 3 

C-130 Hercules -do- 6 

C-47 -do- 8 

IAI-201 Arava Israel 4 

F27-400 Friendship Netherlands 6 

L- 100-30 Hercules United States 1 

Convair 440 -do- 4 

PC-6B Turbo Porters West Germany 17 

Reconnaissance 

Learjet 25B United States 2 

Cessna 402B -do- 1 

Helicopters 

UH-1H -do- 7 

Bell 212 -do- 2 

SA-315B/HB-315B France 8 

Artillery 

20-mm Oerlikon guns Switzerland 50 

n.a. — not available. 

Source: Based on information from The Military Balance, 1989-1990, London, 1989, 184; 
and "World Defence Almanac," Military Technology [Bonn], 13, No. 1, January 
1989, 42. 



296 



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Zavaleta Mercado, Rene (ed.). Bolivia, hoy. Mexico City: Siglo 
Veintiuno Editores, 1983. 

Las masas en noviembre. La Paz: Liberia Editorial Juven- 
tud, 1983. 



Chapter 5 

Aguirre B., Fernando. "The Legal System of Bolivia." Pages 11-44 
in Kenneth Robert Redden (ed.), Modern Legal Systems Cyclope- 
dia, 10: South America. Buffalo: Hein, 1985. 

Alexander, Robert J. Bolivia: Past, Present, and Future of Its Politics. 
(Praeger Special Studies Series.) New York: Praeger, 1982. 

Andrade, John (ed.). World Police and Paramilitary Forces. New York: 
Stockton Press, 1986. 

Ayala Z., Alfredo. Historia de Bolivia en cuadros sinopticos. La Paz: 
Editorial Don Bosco, 1980. 

Barton, Robert. A Short History of the Republic of Bolivia. La Paz: 
Editorial Los Amigos del Libro, 1966. 

Bascope Aspiazu, Rene. La veta blanca: Cocay cocaina en Bolivia. La 
Paz: Ediciones Aquf, 1982. 

Bedregal Gutierrez, Guillermo. Los militares en Bolivia: Ensayo de 
interpretation sociologica. La Paz: Editorial Los Amigos del Libro, 
1971. 



325 



Bolivia: A Country Study 



Bedregal Gutierrez, Guillermo, and Rudy Viscarra Pando. La lucha 
boliviana contra la agresion del narcotrdfico. Cochabamba: Editorial 
Los Amigos del Libro, 1989. 

Blaustein, Albert P., and Gisbert H. Flanz (eds.). Constitutions of 
the Countries of the World. Dobbs Ferry, New York: Oceana, 1986. 

Bolivia. Codigo penal: Codigo de procedimiento penal. La Paz: Gaceta 
Oficial de Bolivia, 1978. 

Canelas Orellana, Amado, and Juan Carlos Canelas Zannier. 
Bolivia: Coca, cocaina, subdesarrollo y poder politico. La Paz: Editorial 
Los Amigos del Libro, 1983. 

Carter, William E. Bolivia: A Profile. New York: Praeger, 1971. 

Corbett, Charles D. The Latin American Military as a Sociopolitical 
Force: Case Studies of Argentina and Bolivia. Miami: Center for Ad- 
vanced International Studies, 1972. 

Dunkerley, James. "The Politics of the Bolivian Army: Institu- 
tional Development 1879-1935." (Ph.D. dissertation.) Oxford: 
Oxford University, 1979. 

. . Rebellion in the Veins: Political Struggle in Bolivia, 1952-1982. 

London: Verso Editions, 1984. 

English, Adrian J. Armed Forces of Latin America: Their Histories, De- 
velopment, Present Strength, and Military Potential. London: Jane's, 
1984. 

Gott, Richard. Guerrilla Movements in Latin America. London: Thomas 
Nelson and Sons, 1970. 

Harb, Benjamin Miguel. Der echo penal, 2. La Paz: Libreria Editorial 
Juventud, 1988. 

Healy, Kevin. "Bolivia and Cocaine: A Developing Country's 
Dilemmas," British Journal of Addiction [London], 83, 1988, 19-23. 

. "The Boom Within the Crisis: Some Recent Effects of 
Foreign Cocaine Markets on Bolivia's Rural Society and Econ- 
omy." Pages 101-45 in Deborah Pacini and Christine Franque- 
mont (eds.), Coca and Cocaine: Effects on People and Policy in Latin 
America. (Cultural Survival Report Series, No. 23.) Cambridge, 
Massachusetts: Cultural Survival, 1986. 

_. "Coca, the State, and the Peasantry in Bolivia, 1982- 

1988," Journal of Interamerican Studies and World Affairs, 30, Nos. 2-3, 
Summer-Fall 1988, 105-26. 

. "The Political Ascendancy of the Bolivian Peasant Coca 

Grower." (Paper presented at meeting of Latin American Studies 
Association, Miami, December 1989.) Miami: 1989. 

Instituto de Estudios Politicos para America Latina y Africa. Nar- 
cotrdfico y politica: Militarismo y mafia en Bolivia. Madrid: Graficas 
Marcaritas, 1982. 



326 



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Inter- American Commission on Human Rights. Report on the Situ- 
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Kohl, James V. "National Revolution to Revolutionary Restora- 
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Ladman, Jerry R. (ed.). Modern Day Bolivia: Legacy of the Revolution 
and Prospects for the Future. Tempe: Center for Latin American 
Studies, Arizona State University, 1982. 

Landaburu, Federico C. "Bolivia: Participacion de las fuerzas 
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Lora, Guillermo. Causas de la inestabilidad politica y de la crisis de las 
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Malloy, James M., and Eduardo A. Gamarra. Revolution and Reac- 
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Malloy, James M., and Richard S. Thorn (eds.). Beyond the Revo- 
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Bolivia: A Country Study 

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"World Defence Almanac," Military Technology [Bonn], 13, No. 1, 
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328 



Glossary 



ayllu — A self-governing and land-owning peasant community in 
Bolivia's highlands. May refer to either a village, a kinship 
group, or a clan-like organization, usually based on collective 
agriculture. Although a pre-Columbian term, ayllu has been 
used as a synonym for contemporary highland peasant com- 
munities (comunidades) . 

boliviano — Bolivia's official unit of currency. Replaced the peso 
on January 1, 1987. In 1988 the exchange rate was B2.3 = 
US$1. Readoption of the boliviano (Bolivia's currency prior 
to January 1963) in January 1987 redressed the damage done 
to the currency by hyperinflation. 

Cambas — Natives of the lowlands who often look with disdain on 
highlanders (Kollas — q.v.). 

cholo — A term that has a variety of definitions and social implica- 
tions. During colonial times was equivalent to mestizo but has 
evolved to include persons of mixed or pure Indian ancestry 
who are trying to move up the social and economic ladder. 
Cholos speak Spanish in addition to an Indian tongue. 

compadrazgo — Literally, copaternity. A system of ritual coparent- 
hood that links parents, children, and godparents in a close 
social or economic relationship. 

corregidor — The official, usually a white or cholo, in preindependence 
Bolivia charged with administering local Indian affairs. 

encomienda(s) — A system whereby rights over Indian labor and trib- 
ute were granted to individual colonists (encomenderos) in return 
for assuming the responsibility of supervision and religious edu- 
cation of the Indians. 

fiscal year (FY) — Calendar year. 

gross domestic product (GDP) — A measure of the total value of 
goods and services produced by the domestic economy during 
a given period, usually one year. Obtained by adding the value 
contributed by each sector of the economy in the form of profits, 
compensation to employees, and depreciation (consumption of 
capital). The income arising from investments and possessions 
owned abroad is not included, hence the use of the word domestic 
to distinguish GDP from GNP (q.v.). 

gross national product (GDP) — Total market value of all final goods 
and services produced by an economy during a year. Obtained 
by adding GDP (q. v. ) and the income received from abroad 
by residents less payments remitted abroad to nonresidents. 



329 



Bolivia: A Country Study 

import-substitution industrialization — An economic development 
strategy that emphasizes the growth of domestic industries, often 
by import protection using tariff and nontariff measures. Propo- 
nents favor the export of industrial goods over primary 
products. 

informal sector — Unofficial sector of underground economic ac- 
tivity. In Bolivia, consisted principally of coca cultivation, 
cocaine trafficking, and contraband, employing two- thirds of 
the work force. 

International Monetary Fund (IMF) — Established along with the 
World Bank (q. v.) in 1945, the IMF is a specialized agency 
affiliated with the United Nations that takes responsibility for 
stabilizing international exchange rates and payments. The 
main business of the IMF is the provision of loans to its mem- 
bers when they experience balance of payments difficulties. 
These loans often carry conditions that require substantial 
internal economic adjustments by the recipients. 

Kollas — Term for native residents of the Altiplano, including the 
city of La Paz, used somewhat disdainfully by native lowlanders, 
called Cambas (q.v.). 

machismo — Cult of male dominance, derived from the word macho, 
meaning male. 

minifundios — Very small landholdings, legally held, allowing only 
a bare existence. 

mita — A compulsory labor system implemented by the Spaniards 
to work the mines. Required that all able-bodied Indian men 
present themselves periodically for short periods of paid work 
in the mines. Was abused by inhumane treatment of the con- 
scripts, arbitrary extensions of the service period, and deple- 
tion of individual communities of their adult males. 

Paris Club — A Paris-based organization that represents commer- 
cial banks in the rescheduling of national debts. 

pulperia — Originally, a company store; later, a state-subsidized mer- 
chandise store selling goods at stable prices to miners and other 
labor groups. 

rosea — A derogatory term for the national oligarchy whose basis 
of power was strongly shaken by the 1952 Revolution. Desig- 
nated in particular the supportive group of lawyers and politi- 
cians who acted as administrators for the ruling elite. 

state capitalism — A development model or strategy centered on the 
state, which directly controls and manages, through govern- 
ment agencies and public mixed corporations, most of the basic 
industry and infrastructure and uses incentives or disincentives 



330 



Glossary 



to guide growth in the private sector in accordance with de- 
velopment priorities. 

terms of trade — Number of units that must be given up for one 
unit of goods by each party, e.g., nation, to a transaction. The 
terms of trade are said to move in favor of the party that gives 
up fewer units of goods than it did previously for one unit of 
goods received, and against the party that gives up more units 
of goods for one unit of goods received. In international eco- 
nomics, the concept of "terms of trade" plays an important 
role in evaluating exchange relationships between nations. 

value-added tax (VAT) — An incremental tax applied to the value 
added at each stage of the processing of a raw material or the 
production and distribution of a commodity. It is calculated 
as the difference between the product value at a given state and 
the cost of all materials and services purchased as inputs. The 
value-added tax is a form of indirect taxation, and its impact 
on the ultimate consumer is the same as that of a sales tax. 

World Bank — Informal name used to designate a group of three 
affiliated international institutions: the International Bank for 
Reconstruction and Development (IBRD), the International 
Development Association (IDA), and the International Finance 
Corporation (IFC). The IBRD, established in 1945, has the 
primary purpose of providing loans to developing countries for 
productive projects. The IDA, a legally separate loan fund 
administered by the staff of the IBRD, was set up in 1960 to 
furnish credits to the poorest developing countries on much eas- 
ier terms than those of conventional IBRD loans. The IFC, 
founded in 1956, supplements the activities of the IBRD 
through loans and assistance designed specifically to encourage 
the growth of productive private enterprises in less developed 
countries. The president and certain senior officers of the IBRD 
hold the same positions in the IFC . The three institutions are 
owned by the governments of the countries that subscribe their 
capital. To participate in the World Bank group, member states 
must first belong to the IMF (q.v.). 



331 



Index 



AASANA. ^Administration of Airports 
and Aerial Navigation Auxiliary Ser- 
vices 

Acha Valiente, Jose Maria de, 20, 164 
Administration of Airports and Aerial 
Navigation Auxiliary Services (Admin- 
istration de Aeropuertos y Servicios Aux- 
iliares de Navegacion Aerea: AASANA), 
147, 237 

ADN. See Nationalist Democratic Action 
Aeroflot, 213 

agrarian reform, 4, 36, 72, 82, 103, 
115-16, 200 

Agrarian Reform Commission, 36 

Agrarian Reform Law (1953), (1963), 
(1968), 36, 82, 103, 115, 200 

agreements: antinarcotics (1983), 222, 
261; with Brazil, 126, 208, 216; Car- 
tagena Agreement, 215; with Hungary, 
209; of International Tin Council, 
136-37; Lend-Lease Agreement, 225; 
related to free river passage, 148; relat- 
ed to natural gas sales, 131; Rio de la 
Plata Basin commercial and develop- 
ment, 215; with United States, 125 

Agricultural Bank of Bolivia (Banco Agri- 
cola de Bolivia: BAB), 124, 144 

agricultural sector (see also coca industry 
and trade; exports; farming): campesi- 
nos in, 20, 25, 33; coca cultivation of, 
84; crops of, 119-26; employment in, 
101-2, 113; encomiendas of ', 10, 60, 102; 
farming technology in, 126; growth of 
commercial sector in, 24; lack of invest- 
ment in, 35; lack of technology and in- 
frastructure for, 113; land use in, 116, 
118-19; large estates in, 10; peasant 
land-use strategy in, 71-72; perfor- 
mance of, xxxiii, 17, 24, 37, 113-14, 
116; processing of products of, 141; re- 
form in, 4, 36, 168; rural social struc- 
ture in, 70-74; size of labor force in, 
110; slash-and-burn activity, xxxiv, 
128; withdrawal of government inter- 
vention from, 116 

AID. See United States Agency for Inter- 
national Development 

air bases, 235 



aircraft: civil, 236; military, 235-36 
airlines: Bolivian, 147, 171; landing rights 

for foreign, 213 
airports, 87, 147 

Airport Security (Seguridad de Aero- 
puertos), 237 

Air Rescue Service (Servicio Aereo de 
Rescate: SAR), 237 

airstrips, unofficial, 147, 257 

air taxis, 147 

Air Transport Management (Gerencia de 
Transportes Aereos), 236-38 

ALADI. See Latin American Integration 
Association 

Albania, 214 

Albo, Xavier, 65 

Alejo Calatayu terrorist command, 255 
Alexander, Robert J., 227 
Almagro, Diego de, 7-8 
Altiplano, xxiii, 5, 8, 52-53, 58, 115, 126; 

migrants from, 87 
Alto Beni region, 56 
Amazonian Pact, 215, 217 
Amazon River, 56 

Anapo. See National Association of Soy- 
bean Producers 

Ancom. See Andean Common Market 

Andean Common Market (Ancom), 
132-33, 142, 152, 215 

Andean Development Corporation, 132- 
33, 156 

Andean Pact. See Andean Common Market 

Andean Postal Union, 149 

Andes Mountains, xxiii; Cordillera Cen- 
tral of, 54-55; Cordillera Occidental/ 
Cordillera Oriental of, 52-55, 58-59; 
Cordillera Real of, xxiii, 52, 54, 55, 58, 
59 

antimony-mining industry, 137-38 
antinarcotics agreement (1983), 222, 261 
Antinarcotics Law (1988), 212, 258, 266, 
270 

antinarcotics programs (see also Armed 
Forces; Bolivian Air Force; coca indus- 
try and trade; cocaine industry; legis- 
lation, narcotics-related; Rural Area 
Police Patrol Unit), 222, 246 

Antofagasta-Calama Railroad, 25 



333 



Bolivia: A Country Study 



Antofagasta (Chile), 148 

Apasa, Julian, 14, 202 

Aramayo, Carlos, xxix, 27 

Aramayo mines, 4, 103 

Aranibar, Antonio, 192 

Arawak (Mojo) people, 63 

Arce Gomez, Luis, xxxv, 256, 257 

Arce Ruiz, Aniceto, xxviii, xxix, 25, 223 

Argentina: border with, 52; dispute over 
natural gas with, xxxiii, 131, 216; lend- 
ing from, 154; relations with, 208, 216-; 
trade with, xxxiii, 152; use of ports in, 
148; war with (1839), 19 

Argentine Railroad Company (Ferrocar- 
riles Argentinos), 147 

Arguedas, Alcides, 19, 30 

Arguedas, Antonio, 41 

Arias Sanchez, Oscar, 215 

Arica (Chile), 148, 216 

armed forces: disintegration within, 196; 
growth of, 38; rebuilding of, 4, 196; role 
in politics of, 196-98, 221, 222-24, 230 

Armed Forces (Fuerzas Armadas: FF. AA.) 
{see also army), 225, 227; antinarcotics 
activity of, 262; missions of, 230-33, 
237-38; National Progress Bank of, 
246; Operational Tasks Command of, 
262; organization and size of, 231, 
233-36; reform in, 230; School of 
Arms, 241 

Armed Forces National Development Cor- 
poration (Corporation de las Fuerzas 
Armadas para el Desarrollo Nacional: 
Cofadena), 138, 142, 246 

army: current organization of, 233-34; 
establishment and development of, 
222-23; experience in Chaco War of, 
224; political role of, 221, 224-25, 
227-28; power of, 229; Ranger force of, 
229; reorganizations of, 223-24, 226; 
seizes power (1934), 224-25; size of, 
228, 233; training, 240-43 

Army Artillery School (Escuela de Artil- 
leria del Ejercito: EAE), 241 

Army Condors School (Escuela de Con- 
dores del Ejercito: ECE), 241 

Army Health Organization, 224 

Artillery and Antiair Defense Group 
(Grupo de Artilleria y Defensa An- 
tiaerea: GADA), 233 

assassinations, xxxii-xxxiii, 165, 267 

Association of Tin Producing Countries, 
137 



Atacama Desert, xxviii, 20, 22 

Atahualpa, 7 

Atlantic Ocean, xxix 

Authentic Nationalist Revolutionary 
Movement (Movimiento Nacionalista 
Revolucionario Autentico: MNRA), 
38, 46 

Aviation Corps (Cuerpo de Aviation), 
224 

ayllu, 6, 102, 181 
Aymara kingdoms, 3, 6-7, 59 
Aymara people, 63; contact with Incas of, 
xxvi, 6-7; education for, 96; effect of 
agrarian reform on, 72; family struc- 
ture of, 80-81; history of, xxiv; popu- 
lation concentrations of, xxiv; religion 
of, 92 ; subjection by Spaniards of, xxvii 

BAB. See Agricultural Bank of Bolivia 
balance of payments, xxxiii, 150, 152-53, 

185; current and capital account levels 

of, 153; support for, 156 
Ballivian, Adolfo, xxviii-xxix, 22 
Ballivian Rojas, Hugo, 34 
Ballivian y Segurola, Jose, xxviii, 19-20, 

164 

Bamin. See Mining Bank of Bolivia 

Banco de San Carlos, 10 

Banest. See State Bank 

banking system {see also Central Bank), 
10, 108, 246; commercial banks in, 
142-44; dollar versus peso accounts in, 
143; foreign banks in, 142-43; govern- 
ment ownership of, 105; public sector 
institutions in, 144; specialized banks 
in, 143-44 

Bank of Cochabamba, 143 

Bank of Santa Cruz, 142-43 

Banzer Suarez, Hugo, 4, 43-45, 90, 161, 
184; administration of, 104; in 1985 
elections, 187; in 1989 elections, xxxii; 
manipulation of peasants by, 200, 202; 
military in regime of, 230; position on 
NPE of, 188 

Barbie, Klaus, xxx, 46 

barley crop, 120 

Barrientos Ortuno, Rene, administration, 

4, 39-41, 168, 196, 228 
barter system, xxxi, 105 
Battle of Ayacucho (1824), 16 
Battle of Ingavi (1841), 19, 223 
Battle of Tacna (1880), 223 



334 



Index 



Battle of Yungay (1839), 19, 223 
Bedregal Gutierrez, Guillermo, 215, 216 
Belem (Brazil), 148 

Belzu Humerez, Manuel Isidoro, xxviii, 
20, 164 

Beni Department, 55, 83, 119, 127, 259, 
264 

Beni-Madre de Dios-Orton river system, 

56, 147 
Beni River, 56 

BIP. See Multipurpose Intervention Bri- 
gade 

bismuth-mining industry, 137 
black market economy, xxxiii, 102, 109, 
126 

blacks in Bolivia, xxvii, 62 
blancos, 51, 59, 61, 69, 86 
Blanco Soto, Pedro, xxxii 
Bolivarian constitution. See constitution 
(1826) 

Bolivar Palacios, Simon, xxvii, 16-17, 72, 
162; as first president, 16-17 

Bolivia Electricity Company (Compama 
Boliviana de Energfa Electrica), 132 

Bolivian Air Force (Fuerza de Aviacion 
Boliviana: FAB), 225, 235-36; anti- 
narcotics Task Force, 262, 264; 
General Command Systems Depart- 
ment of, 236; Hunter Air Groups of, 
236; Salvage and Rescue Air Group 51 , 
236; Search and Rescue Group 52, 236; 
Tactical Air Groups of, 236; training, 
243; Training Air Groups of, 236 

Bolivian Air Transports (Transportes 
Aereos Bolivianos: TAB), 236-37 

Bolivian American Bank, 143 

Bolivian Bishops Conference (Conferencia 
Episcopal Boliviana: CEB), 90, 92, 199 

Bolivian Catholic University, 94 

Bolivian Cement Company (Sociedad 
Boliviana de Cementos), 142 

Bolivian Coffee Committee (Comite Bo- 
liviano del Cafe: Cobolca), 123 

Bolivian Communist Party (Partido Comu- 
nista Boliviano: PCB), 34, 185, 192 

Bolivian Development Corporation (Cor- 
poracion Boliviana de Fomento: CBF), 
105, 107, 140, 171 

Bolivian Geologic Survey (Servicio Geo- 
logico de Bolivia), 139 

Bolivian Institute for Agricultural Tech- 
nology (Instituto Boliviano de Tecnolo- 
gfa Agricola: IBTA), 126 



Bolivian Institute of Coffee (Instituto Boliv- 
iano de Cafe), 123 

Bolivian Institute of Tourism (Instituto 
Boliviano de Turismo), 149 

Bolivian Investment Bank (Banco de In- 
versiones Boliviano), 144 

Bolivian Iron and Steel Promotion Unit 
(Unidad Promotora de la Siderurgia 
Boliviana), 139 

Bolivian Justice and Peace Commission, 
90, 92 

Bolivian Labor Federation (Central Obrera 
Boliviana: COB), 36, 38, 41-42, 92, 
110, 168; creation and development of, 
xxx, 198; opposition to United States 
military presence by, 264-65; outlaw- 
ing and return of, 199; political partic- 
ipation and power of, 186, 188, 198; 
resistance to NPE of, 188 

Bolivian Naval Force (Fuerza Naval Boli- 
viana), 227 

Bolivian Navy (Armada Boliviana), 227; 
districts and equipment of, 234-35; 
Naval Hydrographic Service of Bolivia, 
238; size and duties of, 234-35 

Bolivian Nuclear Energy Commission 
(Comision Boliviana de Energfa Nu- 
clear), 133 

Bolivian Shipping Company (Empresa 
Naviera Boliviana: Enabol), 238 

Bolivian Socialist Falange (Falange So- 
cialista Boliviana: FSB), 31, 43-44 

Bolivian State Petroleum Company (Y aci- 
mientos Petrolfferos Fiscales Bolivianos: 
YPFB), 104-5, 107; as autonomous en- 
terprise, 171; restructuring of, 129; reve- 
nues of, 108 

bolsin, 109 

Bonaparte: Joseph, 15; Napoleon, 15 
border disputes (see also Chaco War; War 

of the Pacific), 22-23, 26, 102-3, 207, 

208, 223 
boron deposits, 139 
Bourbon Dynasty, 10, 15 
Brazil: accord for gas pipeline and sales 

with, 126, 141, 216; agreement related 

to petroleum product sales, 131-32; 

border dispute with, 26, 208, 223; 

border with, 52; relations with, 208, 

216; trade with, 127, 138, 152, 208; 

treaty with, 22, 26; use of ports in, 148 
Britain, 138 

budget deficit, xxxi, 185-87 



335 



Bolivia: A Country Study 



bureaucracy, 172, 181 

Busch Becerra, German, 31, 165, 225 



Cacen. ^Central Housing Savings and 

Loan Board 
Callahuaya people, 62 
Cambas, 86, 202 

Campero Leyes, Narcisco, 23-24, 223 

campesinos. See agricultural sector; peas- 
ants 

cantons, 181 

Capac, Huayna, 7 

capital movements, 105, 153, 155 

Carabineer Regiment (Regimiento de 
Carabineros), 248 

Cariaga, Juan, 205 

Carrasco, Jorge, 207 

Carter, Jimmy, 45, 208, 209 

cassiterite. See tin-mining industry 

Castro Ruz, Fidel, 214 

C atari (Katari), Tomas, 14 

Catavi-Siglo XX mines massacre, 40, 42, 
76 

caudillos. See military leaders (caudillos) 
CBF. See Bolivian Development Corpo- 
ration 

CEB. See Bolivian Bishops Conference 

cells, military (celulas militares), 226 

CEM. See Staff College 

cement industry, 142 

Center for Forestry Development (Cen- 

tro de Desarrollo Forestal), 128 
Center for Instruction of Special Troops 

(Centro de Instruction para Tropas Es- 

peciales: CITE), 229 
Center for Tropical Agricultural Research 

(Centro de Investigaciones de Agricul- 

tura Tropical: CIAT), 126 
Central American Defense Council (Con- 

sejo de Defensa Centroamericano: Con- 

deca), 239-40 
Central Bank (Banco Central): activities 

of, 108-9; functions of, xxxi, 144 
Central Housing Savings and Loan Board 

(Caja Central de Ahorro y Prestamo 

para la Vivienda: Cacen), 144 
CEPB. See Confederation of Private En- 
trepreneurs of Bolivia 
Chaco Generation, 30 
Chaco region, xxiii, 8, 55-56, 58 
Chaco War (1932-35) {see also Paraguay), 



3, 29-30, 103, 165, 208, 221, 224; ar- 
mistice of, 225; cost of, xxix 

Chapare region: coca-growing and drug- 
trafficking activities in, 84, 125, 257, 
260, 261, 262, 264, 265, 266 

Chile, 19; border dispute with, 22-23, 
26, 102-3; border with, 52; namesake 
political party of, 195; negotiation for 
ocean access with, 216; relations with, 
216; trade with, 127; treaty with, 22, 
23, 26; use of ports in, 148, 208; in 
War of the Pacific, xxvii-xxviii, 3, 164, 
208, 215, 221, 223; war with (1839), 
19 

China, 214 

Chiquitano people, 63 

Chiriguano people, 8, 62 

cholo, 61, 66, 68-69, 79 

Christian Democratic Party (Partido Dem- 
ocrata Cristiano: PDC). See Nationalist 
Democratic Action 

Christianity (see also religions; Roman 
Catholic Church), 13 

Church and Society in Latin America- 
Bolivia (Iglesia y Sociedad en America 
Latina-Bolivia: ISAL-Bolivia), 90 

CIAT. See Center for Tropical Agricul- 
tural Research 

CITE. See Center for Instruction of Spe- 
cial Troops 

Citibank, 142 

Civic Committee, 203 

civil aeronautics school, 236 

class structure. See social structure 

climate, 56, 58 

CME. See "Colonel Gualberto Villarroel" 

Army Military Academy 
CNSS. See Social Security Institute 
COB. See Bolivian Labor Federation 
Cobolca. See Bolivian Coffee Committee 
Coca, Ariel, 256 

Coca Eradication Directorate (Direction 
de la Reconversion de la Coca: Direco), 
125, 258 

coca industry and trade, 13-14, 84, 105, 
112; African slaves in, xxvii; airstrips 
for, 147; crops as alternative to, xxxv, 
123, 125; declared illegal, 125; dollar 
laundering in, 143; effect of Antinar- 
cotics Law (1988) on, 258-59, 261-64; 
effect of Operation Bol-USA on, 261- 
62; eradication program for, xxxiv- 
xxxv, 125, 210-11, 257-58; labor force 



336 



Index 



in, xxxiii-xxxiv, 239; Medellm Cartel 
in, 255; militarization of growing areas 
in, 261 ; revenues from, 20; size and im- 
portance of, xxxiv, 124-26, 150; worker 
opposition to United States military and 
DEA, 264-65 

cocaine industry, 46, 84, 97, 105, 124-26; 
influence of, 178; Medellm Cartel in, 
255; volume of traffic and production 
in, xxxiii, 210-11 

Cochabamba (city), 55, 59, 87 

Cochabamba Department, 55, 124, 127; 
population increase in, 83 

Cochabamba Institute of Social and Eco- 
nomic Studies, xxxiii 

Cochabamba Light and Power Company 
(Empresa de Luz y Fuerza Electrica de 
Cochabamba), 132 

Cochabamba-Santa Cruz highway, 145, 
156 

cocoa production, 124 

Code of Criminal Military Procedure, 245 

Cofadena. See Armed Forces National De- 
velopment Corporation 

coffee production, 123 

Coipasa Saltpan, 53 

Colmilav. See "German Busch" Military 
Aviation Academy 

Colombia, xxxv, 222, 255 

"Colonel Gualberto Villarroel" Army 
Military Academy (Colegio Militar del 
Ejercito "Coronel Gualberto Villar- 
roel": CME), 240-41 

colonization (see also coca industry and 
trade): army role in, 226; effect of, 
83-86, 118-19, 128; government- 
sponsored and spontaneous, 83-84, 
116 

Comibol. See Mining Corporation of Bo- 
livia 

communications system, 148-49 
compadrazgo, 81-82 

Conalid. See National Council Against the 
Unlawful Use and Illicit Trafficking of 
Drugs 

Conapol. See National Council for Politi- 
cal and Social Affairs 
Conase. See National Security Council 
Condeca. See Central American Defense 
Council 

Condepa. See Conscience of the Father- 
land 

Condorcanqui, Jose Gabriel, 14 



Condor (satellite communications sys- 
tem), 149 

Confederation of Private Entrepreneurs of 
Bolivia (Confederacion de Empresarios 
Privados de Bolivia: CEPB): conflict 
with COB of, 186-87; philosophy and 
role of, 187, 204-5 

conflict, regional, 116 

Congress: Chamber of Deputies of, 173, 

174- 75, 176; under 1826 constitution, 
162; under 1831 constitution, 163-64; 
duties and activities of, 173-74; over- 
sight of executive department, 174; po- 
litical power of, 173-74; Senate of, 173, 

175- 76, 177; strength and role of, 
172-73 

congressional commission (comision de con- 

greso), 176 
Conscience of the Fatherland (Concien- 

cia de la Patria: Condepa), 192 
conscription, 231, 233, 238-39 
Conservative Party (Partido Conservador), 

3, 18 

constitution (1825), 162 

constitution (1826), 162-63 

constitution (1831), 163 

constitution (1880), 164 

constitution (1938), 31, 165 

constitution (1944), 165 

constitution (1947), 165, 168 

constitution (1961), 168 

Constitution (1967), 90, 168-69, 171, 173, 
176, 177; extradition rules under, 269; 
provisions for military sector in, 231; 
rules for political parties under, 180 

Constitution and Justice Committee, Sen- 
ate, 270 

construction industry, 141-42 

Contadora process, 214 

cooperatives: mining, 138; promotion by 
MNR of, 104 

Copceo. See Permanent Executive Coor- 
dination and Operations Council 

Corbett, Charles D., 226, 228 

Cordillera Central (Andes Mountains), 
54-55 

Cordillera Occidental (Andes Moun- 
tains), 52-53, 58, 59 

Cordillera Oriental (Andes Mountains), 
53-55, 58 

Cordillera Real (Andes Mountains), xxiii, 
54, 59; Yungas area of, 52, 55, 58, 59, 
63, 70, 71 



337 



Bolivia: A Country Study 



Cordova, Jorge, 20 

Corn and Sorghum Producers Association 
(Productores de Maiz y Sorgo: Proma- 
sor), 120 

corn crop, 1 19-20 

Corr, Edwin, 209, 210 

correctional farm, 272 

corregidor, 1 1 

corregidores de indios, 12-13, 14 

corruption (see also antinarcotics pro- 
grams; coca industry and trade; cocaine 
industry), xxxiv, 46, 222, 256-57 

Costa Rica, 215 

cotton industry, 44, 123-24 

Council of Ministers, 169 

counterinsurgency, 41, 229 

counterinsurgency exercises: Absalom, 
246, 265; United States 87-Bolivia, 
246; United Forces 88, 265 

counterinsurgency policy and programs, 
221, 229, 246, 254 

coups d'etat: in 1847, 20; in 1861, 20; in 
1930, 28; in 1936, 30-31; in 1943, 32; 
in 1946, 33, 165; in 1964, 4, 228; in 
1969, 41, 46, 169; in 1974, 44; in 1978, 
45; in 1979, 46; in 1980, 46; in 
1980-81, 5, 178, 185; attempts in 1949, 
1952, 1970, 1974, 34, 35, 42, 44 

courts (see also Ministry of Interior, Mi- 
gration, and Justice): civil and crimi- 
nal trial, 177; electoral, 179; mayors', 
177; military, 225, 239, 245; narcotics- 
related, 222, 270-71; national labor, 
177; small claims, 177; system of, 173, 
174, 177, 179, 267-68 

credit markets, 143; foreign, 153-54; re- 
sponse to external debt of, 113, 154-55 

credit unions, 144 

criollos, 14-16 

crops, 119-26 

CSDN. See Supreme Council of National 
Defense 

CSUTCB. See General Trade Union Con- 
federation of Peasant Workers of Bo- 
livia 

Cuba, xxx, xxxi, 214, 215, 229 
currency: depreciation of, 37, 101, 105; 
devaluation of, 44, 109, 150; replace- 
ment of, 109; speculation in, 143 
Customs Police (Policia de Aduana), 249, 
252 

Cuzco, 6, 7, 8 
Czechoslovakia, 225 



dairy industry, 127 

Daza Groselle, Hilarion, 22-23 

DEA. See United States Drug Enforce- 
ment Administration 

debt, external (see also Paris Club), xxxi, 
17, 101, 105, 106-7, 153-55, 184, 185, 
187, 211 

Decree 21060 (New Economic Policy), 
187-88 

defense budget. See spending, public 
deforestation, xxxv-xxxvi, 85-86, 128 
Democratic and Popular Unity (Unidad 
Democratica y Popular: UDP), 46, 
185; Siles Zuazo as leader of, 185-86 
DEN. See National Executive Directorate 
Desaguadero River, 53, 59 
development bank, 144 
development corporations, regional, 171 
DGAC. See General Directorate of Civil 

Aeronautics 
Diez de Medina, Fernando, 27 
DIN. See Directorate of National Inves- 
tigations 

Directorate of National Investigations (Di- 
rection de Investigaciones Nacionales: 
DIN), 249 

diseases, 96-97 

DNCSP. See National Directorate for the 
Control of Dangerous Substances 

"Dr. Ladislao Cabrera Vargas" Naval 
Staff College (Escuela de Estado Mayor 
Naval "Dr. Ladislao Cabrera Vargas": 
EEMN), 243 

drought, 113, 119 

drugs. See narcotics industry; narcotics 
use 

Dunkerley, James, 228 

EAA. See "Marshal Jose Ballivian" School 
of Arms 

EAE. See Army Artillery School 
EAEM. See School of High Military Stud- 
ies 

EAEN. See School of High National Stud- 
ies 

EAN. See Naval Application School 
Eastern Airlines, 213 
EBPV. See Young Men's Basic Police 
School 

EC. See "Sergeant Maximiliano Paredes" 

Noncommissioned Officers School 
ECE. See Army Condors School 



338 



Index 



ECEM. See "Marshal Andres de Santa 
Cruz" Command and Staff School 

economic assistance {see also military as- 
sistance), 4, 122, 145, 153-55; based 
on drug regulation programs, 210, 258, 
261; from Brazil, 216; for Emergency 
Social Fund, 106; multilateral and 
bilateral, 155-56; from United States, 
xxxv, 28, 125, 208 

economic development, 101 

economic performance, xxiii, xxxvii, 4, 
24, 28, 37-38, 40, 101-2, 104, 109, 185 

economic policy. See New Economic Pol- 
icy 

ECT. See Technical Training School of 

the Air Force 
education, legal, 178 
education, military, 35, 222-27, 240-41, 

243 

education, police, 248-49, 253-54, 264 
education system: development and 
problems of, 93-96; legislation for pub- 
lic education in, 93-94; rural schools 
in, 93 

EEMN. See "Dr. Ladislao Cabrera 

Vargas" Naval Staff College 
EGA. See "General Rene Barrientos 

Ortufio" Air War School 
EIM. See "General Jose Manuel Pando" 

School of Military Engineering 
electoral law (1980), 180 
electoral law (1986), 179-80, 190 
electoral system, 178-80; in 1989 elec- 
tions, 192; fraud in, 45, 180; municipal 
elections, 181; reforms for, 45, 180 
electricity {see also hydroelecticity), 132-33 
elite class. See social structure 
ELN. See National Liberation Army 
EM. See Staff (army) 
Emergency Social Fund, 106, 156 
EMG. See General Staff 
EML. See Littoral Naval School 
employment. See labor force 
Enabol. See Bolivian Shipping Company 
encomienda system, 10, 60, 102 
ENDE. See National Electricity Company 
energy sector, 128-33 
Enfe. See National Railroad Enterprise 
ENM. See Naval Military School 
Entel. See National Telcommunications 

Enterprise 
enterprises, private, 136, 142 
enterprises, state-owned (see also Mining 



Corporation of Bolivia), xxxvi, xxxvii, 

107, 108, 142, 171-72 
eradication program, coca, xxxiv-xxxv, 

123, 125, 257-58 
erosion, 128 

Escobari Cusicanqui, Jorge, 207 

ESG. See Superior War School 

ESP. See Higher Police School 

Estalsa Boliviana, 136 

Ethiopia, 215 

ethnic groups, 59-69 

ethnic identification, 51, 61, 63 

ETN. See Naval Technical School 

Europe, Eastern, 208-9, 213 

exchange rate system, 105; auction in 
(bolsi'n), 109; exchange houses in, 144; 
floating policy for, 150 

executive branch. See government struc- 
ture 

Explosives Brigade (Brigada de Explosi- 

vos), 252, 255 
export promotion institute, 150 
exports (see also smuggling): of agricultural 
products, 113; of antimony, 138; of 
beef, 147; of cattle, 127; of coca and co- 
caine, 46, 84, 124, 150; dependence on, 
xxxiii, 3; of gold, 138; incentives for 
producing, 106, 150; of minerals, 3, 25, 
44; nontraditional, 139-40; of oil and 
natural gas, 40, 44, 128, 131, 150, 152; 
revenues from, 104, 106, 149-50, 153; 
of timber, 127-28; of tin, xxxiii, 44, 
136, 150, 164; of tungsten, 138; of zinc, 
137 

Expreso del Sud railroad, 147 
extradition treaty, Bolivia-United States 
(1901), 269 

FAB. See Bolivian Air Force 

factionalism, community, 73 

FALZW. See Zarate Willka Armed Forces 
of Liberation 

family structure, 79-82 

Fanexa. See National Factory of Explo- 
sives and Munitions 

farming: highland (Altiplano), 118, 122; 
lowland, 118, 123, 126; valley, 118-19, 
120, 122, 123 

Fatherland's Cause (Razon de Patria: 
Radepa), 32 

FEAE. See Special Elite Antiterrorist 
Force 



339 



Bolivia: A Country Study 



Federal Republic of Germany. See Ger- 
many, Federal Republic of 

"Federal Revolution", 25 

FELCN. See Special Antinarcotics Force 

Feminine Police Brigade (Brigada Poli- 
cial Femenina), 252 

Ferdinand VII (king of Spain), 15 

fertility rate, 97 

FF. AA. See Armed Forces 

fiestas, urban and rural, 74, 77 

financial sector: deregulation of, 108; in- 
stitutions in, 144 

FIPZW. See Pablo Zarate Willka National 
Indigenous Force 

Fire Corps (Cuerpo de Bomberos), 249, 
252 

fiscal policy (see also debt, domestic), 106 
fishing industry, 128 
floods, 113 

Fonvi. See National Housing Fund 

food crops, 119-22 

Food for Peace Program, 122, 156 

food-processing industry, 141 

food self-sufficiency, 113 

forced labor, 3, 13; abolition of, 36; draft 
system (mita) for, 6, 9-10, 60 

Foreign Assistance Act (1985), 210-11 

foreign policy: Latin American integra- 
tion concept in, 217; with neighboring 
countries, 215-17; nonalignment of, 
213-14; relations with other countries, 
207-13 

forests and woodland, xxxiv, 116, 127-28 
FPN. See Nationalist Popular Front 
France, 223 

Free Bolivia Movement (Movimiento Bo- 
livia Libre: MBL), 192, 196, 266 
Fnas Ametller, Tomas, 22 
frost, 119 
fruit crops, 122 

FSB. See Bolivian Socialist Falange 
FSTMB. See Trade Union Federation of 
Bolivian Mineworkers 

GAD A. See Artillery and Antiair Defense 
Group 

Gallardo Lozada, Jorge, 42 

Gamarra, Agustfn, 18-19 

Gamarra, Eduardo A., xxxii 

Garcia Meza Tejada, Luis, xxxii, 46, 
174, 185, 221; corruption in regime of, 
196, 256; human rights violations in re- 



gime of, 214; military in regime of, 196, 
230; seizes power, xxx 

Gelbard, Robert S., 212 

Gendarmerie Corps (Cuerpo de Gendar- 
meria), 248 

General Directorate of Civil Aeronautics 
(Direction General de Aeronautica 
Civil: DGAC), 236 

"General Jose Manuel Pando" School of 
Military Engineering (Escuela de In- 
generia Militar "General Jose Manuel 
Pando": EIM), 226, 241 

"General Rene Barrientos Ortuno" Air 
War School (Escuela de Guerra Aerea 
"General Rene Barrientos Ortuno": 
EGA), 243 

General Staff (Estado Mayor General: 
EMG), 223-24, 231 

General Trade Union Confederation of 
Peasant Workers of Bolivia (Confeder- 
ation Sindical Unica de Trabajadores 
Campesinos de Boliva: CSUTCB), 
112, 202 

Generational Group (Grupo Genera- 

cional), 44, 228, 230 
geographic barriers, 51, 145, 147, 202, 

207 

geography, 52-58 
geothermal energy, 133 
"German Busch" Military Aviation Acad- 
emy (Colegio Militar de Aviation "Ger- 
man Busch": Colmilav), 224, 243 
Germany, Federal Republic of, 39 
Germany: military influence of, 223-24; 

military mission from, 25-26 
GES. See Special Security Group 
gold-mining industry, 133, 138-39 
government administration: cantons in, 
181; departmental divisions for, 180- 
81, 182; municipal government in, 
181-82; provincial divisions of, 180- 
81, 182 

government structure (see also bureau- 
cracy), 168; executive branch, 169-72; 
judiciary, 176-78; legislature, 172-76 

Great Depression, 27-29, 103 

Grenada, 214 

Group of Eight, 215 

Gueiler Tejada, Lidia, xxx, 46, 196 

guerrilla activity, 229 

Guevara, Ernesto "Che," xxx, 41, 229 

Guevara Arze, Walter, 38-39, 46, 191, 
195 



340 



Index 



Gulf Oil Company, 40, 41, 129 
Gutierrez, Mario, 43 
Gutierrez Guerra, Jose, 27 

hacienda, 70-71 

Hari Krishna, 93 

health care system, 96-97 

Healy, Kevin, xxxiv, 261 

Hertzog Garaizabal, Enrique, 33-34 

Higher Police School (Escuela Superior 

de Policias: ESP), 254 
Higher University of San Andres, 18 
highlands. See Altiplano 
Hochschild, Mauricio, xxix, 27 
Hochschild mines, 4, 103 
housing market, 142 
Huanchaca National Park slaying, 255; 

case of, 255, 270 
Huascar, 7 

human rights, 45, 208, 214, 265, 273; in 

social reform, 165; violations of, 45 
Hungary, 209 
Hunter Air Groups, 236 
hydroelectric power, 128, 132-33 
hyperinflation (see also barter system; cur- 
rency), xxxi, 101, 105, 106, 107, 108, 
143, 153 



IBTA. See Bolivian Institute for Agricul- 
tural Technology 
Ichilo-Mamore river system, 147 
ICO. See International Coffee Organi- 
zation 

IDB. See Inter- American Development 

Bank 
Illampu peak, 54 
Illanes, Fernando, 205, 210 
Illimani peak, xxiii, 54 
Ilo (Peru), 148 

IMF. See International Monetary Fund 
imports: controls on sugar, 123; of food, 
35, 37, 116; of illegal agricultural 
products, 113; liberalization of, 105, 
140, 150; volume and composition of, 
152; of wheat, 25 
import-substitution industrialization, 118 
INAC. See National Institute of Civil Aero- 
nautics 

INC. See National Colonization Institute 
Inca Empire, xxvi-xxvii, 6-7, 8, 59 
independence (1825), 3, 17, 102 



Indians (see also Aymara people; Quechua 
people): in armed forces, 29, 229, 238; 
in Altiplano, Yungas, and valleys, 63- 
66; changing levels of population of, 10, 
11, 13; discrimination against, 3, 25; 
factors influencing mobility of, 51; folk- 
Catholicism of, 89, 92; forced labor 
policy for, 3,6; government policy for, 
63; historical status of, xxvii; loss of cul- 
tural ties for some, 60-61; in lowland 
areas, 62-63; migration to cities of, 25, 
79; as peasants, 200; protests of (1990), 
xxxv-xxxvi; ratio in population of, 
xxiv, 51; rebellions of, 7, 8, 13, 14, 20, 
22, 25, 28; role in "Federal Revolu- 
tion," 25; transition from status as, 68; 
tribute (alcabala) from, 3, 10-1 1, 19, 60 

Industrial Bank (Banco Industrial), 143 

Industrial Complex of the Uyuni Saltpan 
(Complejo Industrial de los Recursos 
Evaponticos del Salar de Uyuni), 139 

Industrial Finance Bank (Banco de Finan- 
ciamiento Industrial), 143-44 

Industrial Incentives law (1971), 140 

industrial sector (see also construction in- 
dustry; energy sector; manufacturing; 
mining industry), 128-42; import- 
substitution industrialization for, 118; 
labor force elite in, 75; size of labor 
force in, 110 

inflation (see also hyperinflation), xxx- 
xxxi, xxxvi, xxxvii, 4, 35, 37, 38, 76, 
105, 106, 126, 161, 187 

informal economy, 110, 112; components 
of, 112-13, 141; credit market in, 143 

infrastructure: effect of limited, 113, 145; 
improvement in, 72; military sector 
work on, 237 

Institute for the Rural Development of the 
Altiplano (Instituto para el Desarrollo 
Rural del Altiplano: IDRA), 126 

Institutional Revolutionary Party (Partido 
Revolucionario Institucional: PRI), 
Mexico, 184 

insurance market, 144 

insurgency, xxx, 41 

Integrated System of Financial Adminis- 
tration and Governmental Control (Sis- 
tema Integrado de Administracion 
Financiera y Control Gubernamen- 
tales: Safco), 172 

Intelsat. See International Telecommuni- 
cations Satellite Organization 



341 



Bolivia: A Country Study 



Inter- American Development Bank (IDB), 

145, 155-56, 217 
Inter- American Foundation, 156 
interest groups: civic committees as, 202- 
3; labor unions as, 42, 110, 112, 198- 
200; military as, 196-98; miners as, 36, 
40-41; peasants as, 36-37, 45, 200, 
202; private sector as, 203-5 
International Bismuth Institute, 137 
International Coffee Organization (ICO), 
123 

International Drug Enforcement Confer- 
ence (1986), 261 
International Mining Company, 138 
International Monetary Fund (IMF): 
aborted stabilization plans of, 105; ad- 
ministers escrow fund, 155; assistance 
from, 4, 40, 153, 155-56, 217; austerity 
measures recommended by, 45; Siles 
Zuazo interaction with, 186-87; stabili- 
zation plan (1956-57), 104; stabiliza- 
tion plan (1985), 101-2 
International Police (Interpol), 249 
International Telecommunications Satel- 
lite Organization (Intelsat), 149 
International Tin Council (ITC), 136 
Interpol. See International Police 
investment, foreign direct, xxxvi, xxxvii, 
153 

investment, public, 140 
iron-mining industry, 139 
irrigation, 126 
Italy, 225 

Itenez-Paraguay river system, 148 
IU. See United Left 



jails, 272 

Japanese in Bolivia, 116 

Jehovah's Witnesses, 92 

Judicial Police (Policfa Judicial), 268, 270 

judicial system (see also court system), 
176-78, 222; actions in drug-related 
cases of, 270-71; alleged corruption in, 
270; extradition under, 269; mecha- 
nism for illegal drug trafficking, 258-59 

Julius III (pope), 89 

Karachipampa smelter, 134, 137 
Katarista movement, 202 
Kennedy International Airport, 147 
kinship, 52, 72 



kinship groups (ayllus), 71 
Klein, Herbert S., 9, 229, 230 
Kolata, Alan, xxvi 
Kolla Indians, xxiv, xxvi 
Kollas, 86, 116 
Kollasuyo economy, 6-7 
Kundt, Hans, 223 

LAB. See Lloyd Bolivian Airline 
labor force (see also forced labor): associ- 
ation role for, 77; effect of coca indus- 
try on, 126; employed in agriculture, 
101-2, 113; employment in, xxxiii, 
106, 110; forced labor (mita) system in, 
60; geographical distribution of, 110; 
of manufacturing sector, 141; miners' 
militia, 36, 38, 40; nonunionized part 
of, 112; radicalism in, 33-34; role of 
miners in, 35-36, 40-41, 76-77, 197; 
in services sector, 110; size and growth 
in, 109-10; unrest in, 4; women in, 
110; working-class segment of, 74-77 
labor unions (see also Bolivian Labor Fed- 
eration; miners; strikes): as basis for de- 
velopment of political system, 165; 
coercion by, 197, 199-200; Convergence 
Axis of, 200; of miners, 112, 198-99; or- 
ganization of, 76; of peasants, 112, 202; 
repression of, 104; strength of, 34, 110, 
112 

Lake Poopo, 53 

Lake Titicaca, xxiii, 5-6, 53, 58, 147, 234 
land: distribution of, 35, 114; reform for 
ownership of, 4, 36, 51, 70, 103, 114-16 
land use, 116, 118-19 
languages: Aymara, 3, 62, 63, 65-66, 76, 
96; bilingual and trilingual groups, 76; 
Callahuaya, 62; Quechua, 6, 62, 63, 
65, 76, 96; Spanish, 3, 62, 65, 76, 96 
La Paz: establishment of, 8; location of, 
xxiii; population of, 87; as tin indus- 
try center, 26 
La Paz Department, 124 
La Paz Departmental Police, 252 
La Paz Municipal Police, 252-53 
Latin American Bishops Conference, 92 
Latin American Economic System (Sis- 
tema Economico Latinoamericano: 
SELA), 215 
Latin American Free Trade Association 
(LAFTA). See Latin American Integra- 
tion Association 



342 



Index 



Latin American Integration Association 
(Asociacion Latinoamericana de Inte- 
gration: ALADI), 152, 215 

Law Governing Trials of Responsibility, 
164 

Law of Regulations for Coca and Con- 
trolled Substances (1988). See Anti- 
narcotics Law (1988), 212 

Law on Judicial Organization (1978), 267 

lead-mining industry, 137 

Lechi'n, Juan Oquendo, 37, 38, 39, 188, 
194-95 

Leftist Revolutionary Party (Partido de 
Izquierda Revolucionaria: PIR), 31, 34 
legal culture, 178 

legislation, narcotics-related, 212, 258- 

59, 261-64, 266, 270 
Lend-Lease Agreement, 225 
Liberal Party (Partido Liberal), 3, 23-24; 

"Federal Revolution" of, 25; opposition 

party to, 27; role in government of, 25-26 
Liberators of America Corridor (Corredor 

Libertadores de America), 147 
Linares Lizarazu, Jose Maria, xxviii, 20 
literacy rate, 93, 94 
lithium deposits, 139 
Littoral Naval School (Escuela de Mari- 

neria Litoral: EML), 243 
livestock industry, 126-27 
llamas, 145 
llanos, 52, 110 

Lloyd Bolivian Airline (Lloyd Aereo Boliv- 
iano: LAB), 147, 171 

lowland region: colonization of, 116; pop- 
ulation in, 51, 58, 59; topography and 
climate of, xxiii, 55-56 

Luque, Hernando de, 7 

machismo, 78 

macroeconomic policy. See fiscal policy; 

monetary policy; tax policy 
Madeira River, 56 
Madre de Dios River, 56 
magnesium deposits, 139 
Malloy, James M., xxx 
Mamore River, 56 
Manco Inca, 7-8 

manufacturing: agricultural product 
processing, 141; labor force, 141; per- 
formance of, 139-40; public investment 
in, 140; subsectors of, 140-41 

marketing networks, 72 



"Marshal Andres de Santa Cruz" Com- 
mand and Staff School (Escuela de 
Comando y Estado Mayor "Mariscal 
Andres de Santa Cruz": ECEM), 226, 
241 

"Marshal Jose Ballivian" School of Arms 
(Escuela de Aplicacion de Armas "Ma- 
riscal Jose Ballivian: EAA), 225, 226 

Marxism, 31, 90, 196 

massacre: of miners (1967), 40, 42; of 
peasants at Tolata (1974), 44, 202; of 
working class, 76 

Mataco-Mac'a people, 63 

Matarani (Peru), 148 

MBL. See Free Bolivia Movement 

Medellm Cartel, 222, 255, 259 

media, 205-7 

Medium Miners Association (Asociacion 

de Mineria Mediana), 134 
Melgarejo Valencia, Mariano, xxviii, 

xxix, 20, 22, 164 
Mennonites, 93, 116 
Mercantile Bank, 143 
mestizos, 16, 25, 51, 61, 66-69, 74, 86 
metal-fabricating industry, 141-42 
metallurgical complexes, 213 
metallurgy academy, 10 
Methodists, 93 
Mexico, 184, 198 
Meza Tejada, Luis Garcia, 5 
migration {see also colonization): to cities, 

51 ; to Cochabamba, 87, 89; effect of, 73; 

effect on social relations of, 82-86; in 

Inca Empire, 59; of Indians, 25, 79; to 

mining regions, 27; as seasonal workers, 

82 

Military Academy (Colegio Militar), 35, 
222, 223, 224, 226, 227 

Military Air Transports (Transportes Ae- 
reos Militares: TAM), 147, 236 

military assistance: for antidrug programs, 
261; from Taiwan, 247; United States 
suspension of, 208; from United States, 
208, 221, 225, 227, 229, 245- 47, 261 

military bases, 234 

Military Criminal Code, 245 

military equipment, 233, 234-36 

military exercises, Bolivian-United States, 
264-65 

military leaders (caudillos), xxviii, xxx, 

4-5, 19-22, 163-64 
Military-Peasant Pact (Pacto Militar-Cam- 

pesino), 40 



343 



Bolivia: A Country Study 



Military Police, 237 

military sector: civilian services of, 
237-38; conscription in, 238-39; drug- 
related corruption in, 256; Generation- 
al Group in, 44; impact of 1952 Revo- 
lution on, 226; improvement of, 25-26, 
197; occupation of mines by, 40, 44; 
proposals for constitutional reform 
by, 231-32; ranks, insignia, and uni- 
forms of, 239-40; revival and power of, 
xxx, 227; role in politics of, 4, 196, 
227-28; seizes and maintains control 
(1964), 221, 225; support of democracy 
by, 197; training for, 240-45 

military zones, or regions, 224, 233 

militias, miners', 36, 38, 40 

militias, popular (milicias populates): 
decreased strength of, 227, 228; estab- 
lishment and growth of, 226 

mineral policy, 139 

mineral resources (see also mining indus- 
try; tin-mining industry), 3, 8-9, 17, 
25, 42, 44, 102, 133, 137-39 

miners: massacres of, 40, 42; militias of, 
36, 38, 40; strikes by, 27, 28, 32; unions 
of, 112, 134, 198-99 

minifundios, 118 

Mining Bank of Bolivia (Banco Minero 
de Bolivia: Bamin), 36, 105, 134, 144 

Mining Company of Oruro, 136 

Mining Company of the Oriente, 139 

Mining Corporation of Bolivia (Corpora- 
tion Minera de Bolivia: Comibol), 
103-4, 105, 107; as autonomous enter- 
prise, 171; creation of, xxx, 36; elec- 
tricity generation by, 132; performance 
and revenues of, 37, 40, 108; structure 
of, 39, 40, 133-34, 199 

mining industry (see also cooperatives, 
mining; mineral policy; miners; 
smelters), 3, 8-10, 101; cooperatives in, 
136; elite group in, 164; medium 
miners in, 134 

ministers of state, 169 

Ministry of Agriculture, Campesino Af- 
fairs, and Livestock Affairs, 125 

Ministry of Education and Culture, 94, 
134 

Ministry of Energy and Hydrocarbons, 
132 

Ministry of Foreign Affairs and Worship, 

261, 269 
Ministry of Information, 206 



Ministry of Interior, 248 

Ministry of Interior, Migration, and 

Justice: Public Ministry of, 267-68; 

reformatory supervision by, 272; Social 

Defense Subsecretariat of, 258, 264, 

267 

Ministry of National Defense, 227, 233, 
235, 248 

Ministry of Peasant Affairs, 37 

Ministry of Social Services and Public 
Health, 97, 134 

Ministry of Taxation, 108 

Ministry of Transport and Communica- 
tions, 249 

minority groups, 62 

MIR. See Movement of the Revolution- 
ary Left 

Miranda, Rogelio, 42 

missionaries, Christian, 13, 63, 89 

mita system, 6, 9-10, 13, 60, 102 

MITKA. See Tupac Katari Indian Move- 
ment 

MNR. See Nationalist Revolutionary 
Movement 

MNRA. See Authentic Nationalist Rev- 
olutionary Movement 

MNRI. See Nationalist Revolutionary 
Movement of the Left 

Monesterios, Osvaldo, 207 

monetary policy, 108 

Montes Gamboa, Ismael, xxviii, 26 

MOR. See Revolutionary Labor Move- 
ment 

Morales Hernandez, Agustm, xxxii, 22, 
164 

Moreira Rojas, Jorge, xxxvii 

Mormon religion, 92 

mortality rate, 96 

mortgage financing, 144 

Movement of the Revolutionary Left 
(Movimiento de la Izquierda Revolu- 
cionaria: MIR), 185, 189-91, 195- 
96 

Mozambique, 215 

MPC. See Popular Christian Movement 
MRTK. See Tupac Katari Revolutionary 

Movement 
Multipurpose Intervention Brigade 

(Brigada de Intervention Polivalente: 

BIP), 249 
municipal government, 181-82 
Murillo, Pedro Domingo, 16 
Mutun iron mine, 139 



344 



Index 



narcoterrorism, 212, 255-56 

narcotics abuse, xxxiii, xxxiv, 97-98, 222 

narcotics industry. See antidrug campaign; 
coca industry and trade; cocaine indus- 
try; drug abuse 

narcotics trafficking (see also Antinarcotics 
Law; coca industry and trade; cocaine 
industry; court system; legislation, 
narcotic-related; MedelKn Cartel; Rural 
Area Police Patrol Unit; United States), 
254-66 

National Association of Soybean Producers 
(Asociacion Nacional de Productores de 
Soya: Anapo), 122-23 

National Bank, 143 

National Chamber of Mining (Camara 

Nacional de Minena), 134 
National Colonization Institute (Instituto 

Nacional de Colonization: INC), 116 
National Congress of Workers (1912), 27 
National Corps of Carabineers (Cuerpo 

Nacional de Carabineros), 247 
National Council Against the Unlawful Use 

and Illicit Trafficking of Drugs (Con- 

sejo Nacional Contra el Uso Indebido y 

Trafico Ilicitode Drogas: Conalid), 258, 

259 

National Council for Political and Social 
Affairs (Consejo Nacional Politico y So- 
cial: Conapol), 169 

National Crusade in Favor of Indians, 28 

National Directorate for the Control of 
Dangerous Substances (Direction Na- 
cional para el Control de Sustancias 
Peligrosas: DNCSP), 125, 169, 258 

National Electoral Court, 45, 173, 178-80 

National Electricity Company (Empresa 
Nacional de Electricidad: ENDE), 132 

National Electrification Institute (Instituto 
Nacional de Electrification), 132 

National Executive Directorate (Direc- 
torio Ejecutivo Nacional: DEN), 260- 
61 

National Factory of Explosives and Mu- 
nitions (Fabrica Nacional de Explosivos 
y Municiones: Fanexa), 246 

National Federation of Credit Unions 
(Federacion Nacional de Bancos Co- 
operatives), 144 

National Federation of Mining Cooper- 
atives of Bolivia (Federacion Nacional 
de Cooperativas Mineras de Bolivia), 
136 



National Highway Service (Servicio Na- 
cional de Carreteras), 249 

National Housing Fund (Fondo Nacional 
de Vivienda: Fonvi), 142 

National Indigenous Congress, 33, 34 

National Institute for Export Promotion, 
106 

National Institute of Civil Aeronautics (In- 
stituto Nacional de Aeronautica Civil: 
INAC), 236 

National Institute of Cooperatives (Insti- 
tuto Nacional de Cooperativas), 136 

National Investment Institute (Instituto 
Nacional de Inversiones), 140 

nationalism, revolutionary, 41-43 

Nationalist Democratic Action (Action 
Democratica Nacionalista: ADN): Ban- 
zer Suarez as leader of, 161, 185-86, 
195; Christian Democratic Party, 
189-90, 191; corruption in, 256-57; ef- 
fect of pacto on, 188-90 

Nationalist Popular Front (Frente Popu- 
lar Nacionalista: FPN), 43 

Nationalist Revolutionary Movement 
(Movimiento Nacionalista Revolucio- 
nario: MNR), xxix, 32-33; failures of, 
184; overthrow (1964) of, 37, 183, 194- 
95; Paz Estenssoro as leader of, 161-62, 
168, 185; policies of, 101, 103-4, 188- 
90; political position of, 165, 168, 194; 
role in 1952 Revolution of, 4, 35-39, 
194, 221 

Nationalist Revolutionary Movement of 
the Left (Movimiento Nacionalista 
Revolucionario de Izquierda: MNRI), 
xxx, 185, 192 

nationalization, 3-4, 30, 32, 36, 37; of 
mines, 168; of oil industry, 129; under 
revolutionary nationalism, 41-43 

National Leftist Revolutionary Party 
(Partido Revolucionario de la Izquierda 
Nacional: PRIN), 39 

National Liberation Army (Ejercito de 
Liberation Nacional: ELN), 195, 229 

National Police (Policia Nacional), 35, 
247 

National Police Academy (Academia Na- 
cional de Politias), 248, 249, 254 

National Police Corps (Cuerpo Nacional 
de Policia), 248-49; Department of So- 
cial Communication in, 252; organiza- 
tion and activities of, 251-53; search- 
and-destroy drug operations of, 261 



345 



Bolivia: A Country Study 



National Railroad Enterprise (Empresa 
Nacional de Ferrocarriles: Enfe), 146- 
47, 171 

National Road Service (Servicio Nacional 
de Caminos: Senac), 145 

National Security Council (Consejo Na- 
cional de Seguridad: Conase), 169, 
231; Permanent Secretariat, 231 

National Telecommunications Enterprise 
(Empresa Nacional de Telecomunica- 
ciones: Entel), 148, 171 

National Television Company (Empresa 
Nacional de Television), 148 

"national unity and convergence alli- 
ance," 189-90 

National War College. See School of High 
National Studies 

National Wheat Institute (Instituto Na- 
cional del Trigo), 120 

natural gas industry: as export replace- 
ment, 101; performance of, 104, 131; 
reserves of, 55, 56, 131 

natural resources. See agricultural sector; 
mineral resources; natural gas indus- 
try; oil industry; paper industry; tim- 
ber industry 

Natusch Busch, Alberto, 46 

Naval Application School (Escuela de 
Aplicacion Naval: EAN), 243 

naval force, 227 

Naval Military School (Escuela Naval 

Militar: ENM), 243 
Naval Technical School (Escuela Tecnica 

Naval: ETN), 243 
Navarro, Gustavo (Tristan Marof), 28, 

29 

New Economic Policy (Nueva Polftica 
Economica: NPE), 92, 105-7, 112, 
129; effect of Pact for Democracy on, 
161-62, 188-90; effect of policies of, 
xxxi, 140, 161, 172; resistance to and 
support for, 187-88, 205; technocrats 
in, xxxi, 161 

Newlyweds of Death (Los Novios de la 
Muerte), xxx 

newspapers, 148, 206-7 

New Tribes Mission, 63 

Nicolaus loan, 28 

9th of April Revolutionary Vanguard (V an- 
guardia Revolucionaria 9 de Abril: 
VR-9 de Abril), 191 
Nonaligned Movement, 214, 215, 216 
NPE. See New Economic Policy 



Nueva Palmira (Uruguay), 148 



OAS. See Organization of American States 

Occidental International, 129 

officer corps, 225, 226; attitudes of youn- 
ger officers, 197-98; demoralization of, 
45; in drug trafficking, 46, 230; train- 
ing of, 229 

oil industry, 44; exploration plans for, 129; 
history of, 129; performance of, 104, 
129; production in, 131; refineries of, 
129-30; reserves of, 55, 56, 104; reve- 
nues of, 108 

oilseed production, 124 

Olafieta, Pedro Antonio de, 16 

Operation Blast Furnace, 197-98, 210, 
212, 222, 261 

Operation Bol-USA (Operation Blast Fur- 
nace), 261-62 

Operation Snowcap, 264 

Organic Law of Municipalities, 181 

Organic Law of Police and Carabineers of 
Bolivia (1950), 248 

Organization of American States (OAS), 
156, 209, 215 

Oriente region, 83, 84-85 

Oruro (city), 87 

Ossio Sanjines, Luis, xxxii, 189-90, 191 
Ovando Candi'a, Alfredo, 4, 39, 41, 169, 

208, 212, 214; contribution to military 

sector by, 228 



Pablo Zarate Willka National Indigenous 
Force (Fuerza Indigenista Pablo Zarate 
Willka: FIPZW), 256 

pacenos, 65-66 

Pacheco Leyes, Gregorio, xxix, 24 
Pacific Ocean access, 22-23, 208, 215, 216 
Pact for Democracy (Pacto por la 

Democracia: pacto), 161-62, 188-90, 210 
pacto. See Pact for Democracy 
Padilla Arancibia, David, 45, 230 
Palenque, Carlos, 192 
Palestine Liberation Organization (PLO), 

209 

Panama, 226, 229 
Pando, Jose Manuel, 25 
Pando Department, 55, 119 
Pano people, 63 
paper industry, 141 



346 



Index 



Paraguay (see also Chaco War): border 

with, 52; war with, xxix, 3, 29-30, 103, 

208, 221, 224 
Paraguay River, xxix, 56 
Paris Club, xxxvi, 154, 213 
Patino, Simon, xxix, 27 
Patino mines, 4, 32, 103 
Patriotic Accord coalition (see also "national 

unity and convergence alliance"), xxxii, 

189-90, 
patron, 78 

patronage, 172, 177 

Paz Estenssoro, Victor, xxviii, 32, 34-35; 
administration of, xxxii, 4, 37, 39, 76, 
161-62, 168; antinarcotics programs of, 
210, 222, 258, 261-62, 266; cabinet 
composition (1989), 172; Civic Action 
Program of, 237; corruption in regime 
of, 256; coup against (1964), 228; for- 
eign policy of, 214; militia formation 
by government of, 226; New Economic 
Policy of, xxxi, 92, 101, 105-6, 187-90; 
popularity and reelection of, 187, 195; 
stabilization policy of, 109; strengthen- 
ing of army by, 229 

Paz Zamora, Jaime, 169; administration 
of, 231; antinarcotics institutions under 
regime of, 259; economic policies of, 
xxxvi; in 1985 elections, 187, 196; in 
1989 elections, xxxii, 189-90; narcotics- 
related activities of, xxxiv-xxxv 

PCB. See Bolivian Communist Party 

Peace Corps, xxxv, 42, 156, 208 

Peasant-Military Pact, 200, 202 

peasants: influence of, 36-37; militia of, 
40; rise of organizations of, 73 

Penal Code (1978), 245, 269, 271 

penal system, 271-73 

Penaranda Castillo, Enrique, 31-32 

penitentiary (Panoptico), 272 

Pentecostal religions, 92 

Pereda Asbun, Juan, 45 

Perez, Elizardo, 93 

Permanent Assembly of Human Rights 
of Bolivia (Asamblea Permanente de 
Derechos Humanos de Bolivia), 265 

Permanent Executive Coordination and 
Operations Council (Consejo Per- 
manente de Coordinacion Ejecutiva y 
Operativa: Copceo), 259-60 

Permanent Tribunal of Military Justice, 
245 

Peru (see also Upper (Alto) Peru): border 



with, 52; invasion by (1827) and 
attempts to invade, 18-19; trade with, 
127; treaty with, 22; use of ports in, 148; 
in War of the Pacific, 23, 164 
Peru-Bolivia Confederation (1836), 19, 
163-64 

petroleum industry. See oil industry 

Pilcomayo River, 56 

Pinochet Ugarte, Augusto, 45 

pipeline, gas, 128, 131, 141 

pipeline accord, 126 

PIR. See Leftist Revolutionary Party 

Pizarro, Francisco, xxvii, 7-8 

Pizarro, Gonzalo, 8 

Pizarro, Ramon Garcia Leon de, 16 

PMA. See Polytechnical Military School 
of Aeronautics 

police forces (see also Judicial Police; Mili- 
tary Police; National Police; Traffic 
Police), 226, 247-48, 247-49; antinar- 
cotics, 222; constitutional powers and 
limits of, 268; recruitment and train- 
ing in, 253-54 

police forces, special, 249, 251 

Police General Command, 249 

Police Law (1886), 248 

Police School (Escuela de Policfa) (see also 
National Police Academy), 248 

political instability, 162, 164-65, 172, 182- 
83, 184-87; effect on agricultural sector 
of, 37-38, 114; effect on IMF attempts 
to stabilize, 105; in 1989 elections, 190- 
94; from 1839 to 1879, 19-22 

political system: basis for party develop- 
ment in, 165; "Federal Revolution" in, 
25; fragmentation in, 45, 190-95; new 
political parties in, 23, 190-95; peasant 
and Indian organizations in, 202; rise 
of new groups within, 31-33; role of 
media in, 205-7; role of rosea in, 27, 28; 
role of tin-mining executives in, 25 

Polytechnical Military School of Aeronau- 
tics (Politecnico Militar de Aeronautica: 
PMA), 243 

Popular Assembly (Asamblea Popular), 
42-43, 184 

Popular Christian Movement (Movimiento 
Popular Cristiano: MPC), 40 

population: comparative density of, xxiii- 
xxiv; concentrations of, 51, 58-59; effect 
of colonization on concentration of, 83 ; 
growth of, 51, 58, 116; growth of urban, 
xxiv, 86-89; increase in Chapare region 



347 



Bolivia: A Country Study 



of, 83, 84; Indians in, xxiv; settlement 
in Yungas area of, 58, 59 
populism, 165 

POR. See Revolutionary Workers Party 
ports: access to, 148, 207-8; facilities of, 
148 

post offices, 149 
potassium deposits, 139 
potato crops, 119 

Potosi' (city), xxvii, 8-10, 26, 87, 102, 137 
Potosi' Department, 26, 96, 136, 137-38 
Prado Salmon, Gary, 44 
precipitation, 52-53, 55-56, 58 
prefects, departmental, 181 
president: powers and duties of, 169, 171, 
231 

PRI. See Institutional Revolutionary Party 
price system: for food and agricultural 
products, 113, 116; government con- 
trols for, 44 
PRIN. See National Leftist Revolutionary 
Party 

private sector {see also enterprises, private): 
as interest group, 203-5; before 1952 
Revolution, 203-4 

privatization, xxxvi, xxxvii, 106, 171- 
72 

Promasor. See Corn and Sorghum Pro- 
ducers Association 

protectionism, 140 

PS-1. See Socialist Party One 

Public Ministry. See Ministry of Interior, 
Migration, and Justice 

Public Prison, Santa Cruz Department, 
273 

public sector: growth of, 101-2, 103-5, 

172; plan to decrease size of, 105 
pulpertas, 133-34 



Quechua people (see also Inca Empire), 
6, 59; education for, 96; effect of agra- 
rian reform on, 72; family structure 
of, 80-81; history of, xxiv; population 
concentrations of, xxiv, 63; religion 
of, 92; subjugation by Spaniards of, 
xxvii 

quinoa crop, 120 

Quintanilla Quiroga, Carlos, 31 



radio communication, 148, 206 



railroad system: to cities and tin-mining 
areas, 26; development of, 145-47; link 
to Brazil by, 26, 116; to Pacific coast, 
24, 25 rain forest, 55 

Ranger School, 229 

Reactivation Decree (1987), 106 

Reagan, Ronald, 209, 210-11 

rebellion: of miners, 34; of peasants, 44; 
of students, teachers, and workers, 33 

reforestation, xxxv-xxxvi 

reformatories, 272 

religions: Christianity, 13, 89-93; folk- 
Catholicism, 92; Indian, 13; Roman 
Catholicism, 89-90, 92 

repression, 44 

Republican Party, 3, 27 

Reserve Officers School (Escuela de Ofi- 
ciales de la Reserva), 223 

revolts, military, 222 

Revolution (1952): adoption of universal 
suffrage during, xxix, 4, 163, 180; eco- 
nomic goals of, 103; effect on social 
structure of, xxix, 68-69, 78; impact of, 
xxix-xxx, 4, 35-39, 168, 182-84, 221; 
land reform measures of, xxix, 4, 114; 
leaders of, xxix; nationalization policy 
of, xxx 

Revolutionary Front of the Left (Frente 

Revolucionario de Izquierda), 191 
Revolutionary Labor Movement (Mo- 

vimiento Obrero Revolucionario: 

MOR), 267 
Revolutionary Mandate of the Armed 

Forces, 41 

Revolutionary Workers Party (Partido 
Obrero Revolucionario: POR), 31, 34 
rice crop, 120 

Rio de la Plata Basin agreement, 215, 217 
River and Lake Force (Fuerza Fluvial y 
Lacustre) (see also Bolivian Naval Force), 

227 

river systems, 53, 56, 147-48; navigation 

on, 234 
road system, 116, 145 
Roman Catholic Church: newspaper of, 

206 

Roman Catholicism: church as political 
force, 89-90; diminished role of, 18, 26; 
as important religion, 89; missionaries 
of, 13, 62; organization of church, 92; 
role in social unrest of, 44 

Romero, Fernando, 205 

Rosario (Argentina), 148 



348 



Index 



rosea, xxix, 27, 28, 29, 31, 103 

Rowell, Edward, 210-11 

Royal Dutch Shell, 29 

rubber industry, 24, 62 

Rural Area Police Patrol Unit (Unidad 
Movil Policial para Areas Rurales: 
Umopar), 209, 212, 251, 257, 258, 259, 
261; antinarcotics training for, 264; in 
FELCN, 262 

Rural Electricity Cooperative (Coopera- 
tiva Rural de Electrificacion), 132 



Saavedra Mallea, Bautista, 27-28 
Safco. See Integrated System of Financial 
Administration and Governmental Con- 
trol 

Sajama peak, xxiii, 52 

Salamanca Urey, Daniel, 28-29, 164-65, 

224-25 
salt flats, 53, 139 
San Andres University, 94 
Sanchez de Lozada, Gonzalo, 191-92, 205 
Santa Cruz (city), 55, 87, 104; location 

of, xxiii 

Santa Cruz Department, 55, 104, 118-19; 
coca industry in, 124; livestock produc- 
tion in, 126-27; oil and gas production 
in, 131; population increase in, 83 
Santa Cruz y Calahumana, Andres de, 

xxviii, 18-19, 163-64, 222 
Santos (Brazil), 148 
SAR. See Air Rescue Service 
satellite communications system, 149 
savings and loan institutions, 144 
School of High Military Studies (Escuela 
de Altos Estudios Militares: EAEM), 
227-28, 241 
School of High National Studies (Escuela 
de Altos Estudios Nacionales: EAEN), 
228 

School of the Americas (Escuela de las 

Americas), 226, 229, 246 
secessionist movement, 223 
Security Police (Policia de Seguridad), 

248 

security services: drug- related corruption 
in, 256 

SELA. See Latin American Economic Sys- 
tem 

Seleme, Antonio, 35 

Selich, Andres, 44 

Senac. See National Road Service 



Sendero Luminoso (Shining Path), 266- 
67 

"Sergeant Maximiliano Paredes" Non- 
commissioned Officers School (Escuela 
de Clases "Sargento Maximiliano Pa- 
redes": EC), 223, 241 
Serrate Reich, Carlos, 191, 207 
services sector, 142-49; labor in, 110 
settlement. See colonization 
Seventh-Day Adventists, 92 
sexenio period (1946-52), 33-35 
Shultz, George P., 212, 256 
Siles Reyes, Hernando, 28, 224 
Siles Salinas, Luis Adolfo, 41, 46, 229 
Siles Zuazo, Hernan, 32, 34, 37, 38, 
46-47, 105, 178, 184; administration 
of, xxx-xxxi, 185-87, 195-96; antidrug 
program of, 209, 261; coup attempts 
against, xxx, 230; election (1982) of, 
185; reemergence of, 195; resistance to 
NPE by, 188 
silver mines {see also Potosf), 3, 8-9, 17, 
102 

silver-mining industry, 137 

Simon Bolivar Group, 256 

Single Convention on Narcotic Drugs, 
Bolivia-United States (1961), 269 

slavery, xxvii, 62 

smelters, 134, 137 

smuggling, 112, 150 

Social Defense Subsecretariat. See Minis- 
try of Interior, Migration, and Justice 

Socialist Party One (Partido Socialista 
Uno: PS-1), 192 

Social Security Code (1956), 98 

Social Security Institute (Colegio Na- 
cional de Seguridad Social: CNSS), 171 

social security system, 98 

social structure: blancos in, xxiv, 51, 59, 
69, 86; cholos in, 61, 66, 68-69, 79; class 
stratification in, 78-79, 165, 172, 183; 
class structure in, 51-52, 59; criollos in, 
14-16; elite class in, xxix- xxx, 75; frag- 
mentation of, 51; Indians in, 51; mes- 
tizo class, 16, 25, 51, 61, 66, 68-69, 74, 
86; middle class in, 3-4, 27, 51, 78-79, 
172, 194; minority groups in, 62; penin- 
sulares in, 14; reform of, 165; role of 
Popular Assembly in, 42-43; in rural 
areas, 70-74; upper class in, 77-78; in 
urban areas, 74-79 

social unrest, 4, 27, 28, 33, 35, 44, 45 

South American Mission, 63 



349 



Bolivia: A Country Study 



Southcom. See United States 

Soviet Union, 156, 213; relations with, 
42, 208-9, 213 

soybean production, 122-23, 124 

Spain: Bourbon kings of, 10, 15; colonial 
administrative structure of, 11-13, 14; 
colonial rule of, 3, 7-8, 59; conquest 
of Inca Empire by, xxvii, 7; influence 
of, 3; intendancy system of, 12; mili- 
tary mission from, 225; overthrow of 
kin in, 15 

Spanish language, 73-74 

Special Antinarcotics Force (Fuerza Es- 
pecial de Lucha Contra el Narcotrafico: 
FELCN), 251, 255, 259, 262 

Special Elite Antiterrorist Force (Fuerza 
Especial Antiterrorista de Elite: FEAE), 
251 

Special Narcotics-Control Courts, 270-71 

Special Security Group (Grupo Especial 
de Seguridad: GES), 249, 262 

spending, public: for education, 94; ef- 
fect on economy of, 104; efforts to 
reduce, 107, 172; for manufacturing 
sector, 140; for military, 17, 226, 227, 
228, 238; for social programs, 4, 37, 40 

Staff College (Colegio del Estado Mayor: 
CEM), 223, 224 

Staff (army) (Estado Mayor: EM), 224, 
240; National Directorate of Instruction 
and Teaching, 240 

Standard Oil Company, 3, 29-30, 32 

State Bank (Banco del Estado: Banest), 
144 

state capitalism, 183-84 

state of siege, xxxi, xxxiii, 231 

stock exchange, xxxvi, 144 

strikes: by COB, xxx-xxxi, xxxvi, 186, 
197; general, 46; by labor unions, 42, 
110; in mining industry, 27, 28, 32; to 
protest currency devaluation, 44; by 
teachers, xxxiii 

Suarez Gomez, Roberto ("King of Co- 
caine"), 155, 192, 256, 259 

Sucre, 55, 59 

Sucre Alcala, Antonio Jose, xxviii, 16-18, 

89-90, 247 
suffrage: universal, 35, 72, 163, 168; for 

women, 165 
sugar production, 123 
Summer Institute of Linguistics, 63 
Superior War School (Escuela Superior 

de Guerra: ESG), 225 



Supreme Council of National Defense 
(Consejo Supremo de Defensa Na- 
cional: CSDN), 228 

Supreme Court of Justice, 173, 174, 178, 
255; composition and powers of, 
176-77, 270-71; in Garcia Meza trial, 
256 

Supreme Tribunal of Military Justice 
(Tribunal Supremo de Justicia Militar), 
239, 245 

swamps, 55-56 

TAB. See Bolivian Air Transports 
Tacana people, 63 
Taiwan, 214 

TAM. See Military Air Transports 
tariffs, 107, 140, 150 
Tarija Department, 59, 124, 131 
tax evasion, 108 

tax system {see also value-added tax): com- 
plexity of, 108; effect of policy on, 
106-7; historical, 3, 10-11, 19-20, 60; 
reform for (1986), xxxi, 106, 108, 140 

technical assistance: from United States, 
38 

Technical Training School of the Air 
Force (Escuela de Capacitacion Tecnica 
de la Fuerza Aerea: ECT), 243 

Tejada Sorzano, Jose Luis, 29 

telegraph service, 149 

telephone system, 148-49 

television communication, 148, 206 

territorial wars, xxvii-xxviii 

terrorism {see also narcoterrorism), xxxiv, 
255, 267; punishment for, 271-72 

Tesoro Petroleum, 129 

textile industry, 141 

Thesis of Pulacayo, 34 

Tiahuanaco. See Tiwanaku 

timber industry, xxxv-xxxvi, 127-28, 141 

tin-mining industry {see also miners), 3, 
44; development and success of, 26, 
102, 103, 133, 164; impact on middle 
class of, 79; important families of, 103; 
nationalization of, xxx, 168; other metals 
mined by, 137; performance of, xxxi, 
xxxiii, 26-27, 28, 35, 101, 106, 133, 
136-37, 150, 164; plan to restructure, 
39; reserves of, 136; revenues of, 108; 
role of owners and management of, 25, 
27 

Tiwanakan Empire, xxiv-xxv, 5-6 



350 



Index 



Tiwanaku (ancient city), xxv, 3, 5, 149 

Tolata massacre, 202 

Toledo, Francisco de, 9, 12 

Torelio Villa, Celso, 46 

Toro Ruilova, David, 30, 225 

Torres Gonzalez, Juan Jose, 4, 42, 183, 
208, 212, 214, 230 

tourism industry, 149 

trade policy {see also balance of payments), 
107; effect of poor transportation on, 
144-45; traditional exports of, 149 

Trade Union Federation of Bolivian Mine- 
workers (Federacion Sindical de Traba- 
jadores Mineros de Bolivia: FSTMB), 
112, 198-99 

Traffic Police (Policia de Transito), 249, 
252, 268 

training, military, 229, 236 

transportation system: air travel of, 147; 
energy consumption of, 128; informal 
part of, 113; oil and gas pipelines in, 
126, 128, 131, 141, 145; problems of, 

144- 45; railroad development plans for, 

145- 47; by river, 56; rivers in, 147; 
roads in, 145; vehicular traffic in, 145 

Treaty of Peace and Friendship (1904), 
23, 26 

Treaty of Petropolis (1903), 26 
Triangular Plan, 39, 40 
Trinidad, 243 

Tristan Marof. See Navarro, Gustavo 
tungsten-mining industry, 138 
Tupac Amaru, 8 

Tupac Amaru II {see also Condorcanqui, 

Jose Gabriel), 8, 14 
Tupac Katari Indian Movement (Movi- 

miento Indio Tupac Katari: MITKA), 

202 

Tupac Katari National Federation of 
Bolivian Peasant Women (Federacion 
Nacional de Mujeres Campesinas de 
Bolivia Tupac Katari), 112 

Tupac Katari Revolutionary Movement 
(Movimiento Revolucionario Tupac 
Katari: MRTK), 202 

Tupi-Guaram people, 63 



UDP. See Democratic and Popular Unity 
Umopar. See Rural Area Police Patrol Unit 
UN. See United Nations 
Uncia massacre, 76 



underground economy. See black market 

economy 
unemployment, 106, 110 
United Forces '88, 265 
United Left (Izquierda Unida: IU), 192, 

196 

United Mining Company (Empresa Min- 

era Unificada), 137-38 
United Nations (UN), 156, 209, 269 
United States: agreement related to coca 
industry with, 125; antinarcotics agree- 
ment with, 222; Army Special Forces, 
264; Army Special Warfare School, 229; 
assistance with debt reduction plan by, 
155; Border Patrol agents, 264; congres- 
sional position on drug-related spending, 
210-11; economic assistance from, 4, 
38, 156, 211; General Accounting Office 
report, 259; limits to influence of, 42; 
military assistance from, 221, 225, 227, 
229, 245-47, 261-62; military influence 
of, 221, 225, 227, 229; narcotics-related 
relations with, xxxiv, 209; PL-480 as- 
sistance by, 122; relations with, 32, 38, 
208, 210; Southern Command (South- 
corn), 198, 229, 261; technical assistance 
from, 38; trade with, 40-41, 152 
United States Agency for International De- 
velopment (AID), 122, 123; assistance 
with stock exchange by, 144; financial 
assistance from, 156; funding of In- 
tegrated System of Financial Adminis- 
tration and Governmental Control, 172; 
program for judicial system overhaul, 
178; programs dependent on effective 
coca eradication plans, 211 
United States Department of Defense, 156 
United States Department of State, 264, 
268, 273 

United States Drug Enforcement Adminis- 
tration (DEA), xxxv, 156, 212, 255, 
262, 264, 265 

United States Geological Survey, 139 

universities, 94, 126; at Chuquisaca, 14; 
Higher University of San Andres, 18; 
University of Bolivia, 94 

Upper (Alto) Peru, 163; economic and po- 
litical importance of, 8-15; effect of cri- 
ollo/mestizo revolt on, 16-17; power 
struggle in, 15-16 

uranium deposits, 133 

urban areas, 51, 86-89 

Urriolagoitia Harriague, Mamerto, 34 



351 



Bolivia: A Country Study 



Uru-Chipaya people, 63 
Uruguay, 148 
Uru people, 6 
Uyuni Saltpan, 53, 139 



Vaca Guzman, Mario Mercado, 207 
value-added tax (VAT), 106, 108, 113, 
140 

VAT. See value-added tax 
Velasco Alvarado, Juan, 41 
Velasco Franco, Jose Miguel, 19 
Viceroyalty of Peru, 11 
Viceroyalty of Rio de la Plata, 1 1 
Vietnam, 215 

Vildoso Calderon, Guido, 46 

Villarroel Lopez, Gualberto, xxxii, 32- 
33, 165, 225 

Villa Victoria massacre, 76 

Vinto Smelting Company, 134 

Viru-Viru airport, 147 

VR-9 de Abril. See 9th of April Revolu- 
tionary Vanguard 



wages, 38 

Wagner, Maria Luise, 230 
War of Acre (1900-1903), 208, 223 
War of the Pacific (1879-83) {see also 
Atacama Desert), xxvii-xxviii, 3, 22- 
23, 102-3, 144-45, 164, 208, 215, 221, 
223 

water supply, 96 
waterways, inland, 56, 147 



Weisman, Marvin, 209 

wheat crop, 120, 122 

whites. See bianco s 

wildlife preserve, 155 

women: in labor force, 110; in middle- 
class society, 79 

Women's Reformatory, 272 

wood products industry, 127-28, 141 

working class, 74-77 

World Bank: assistance from, 153, 
155-56, 217; assistance with stock ex- 
change by, 144; Enhanced Structural 
Adjustment Facility of, 155; funding for 
electric power by, 132; funding of In- 
tegrated System of Financial Adminis- 
tration and Governmental Control, 
172; railroad rehabilitation by, 147 

Yanez, Placido, 20 

Young Men's Basic Police School (Escue- 
la Basica Policial de Varones: EBPV), 
253 

YPFB. See Bolivian State Petroleum Com- 
pany 

Yungas area (see also Cordillera Real): 
coca cultivation in, 258; correctional 
farm in, 272 



Zarate Willka, Pablo, 25 

Zarate Willka Armed Forces of Libera- 
tion (Fuerzas Armadas de Liberation 
Zarate Willka: FALZW), 267 

zinc-mining industry, 42, 137 



352 



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